Libya is set to restart the last of its major oil fields following a ceasefire in its civil war, a milestone for the Opec member that’s been largely offline since January.
Oil dropped after the state energy firm lifted force majeure on exports from El Feel on Monday. The move will bolster the Tripoli-based National Oil’s attempt to boost Libyan production to 1 million barrels each day within a month.
The return of Libyan barrels is hindering Opec+ as it tries to prop up crude prices amid a resurgence in coronavirus cases and with many major economies imposing lockdowns again. The oil producers’ alliance was set to ease supply cuts by almost 2 million barrels a day in January, but may be forced into a delay.
Crude production from Libya’s western deposit of El Feel, or Elephant in Arabic, will reach normal rates of around 70,000 barrels daily within a few days, the NOC said. Force majeure is a clause in contracts allowing deliveries to be suspended. Monday marks “the end of closures at all Libyan oil fields and ports,” the NOC said.
Libya’s output has risen rapidly over the past six weeks after Khalifa Haftar, a commander in the long-running war, ended a blockade of most energy facilities started in January. His representatives agreed a permanent truce with the United Nations-recognized government of Prime Minister Fayez al-Sarraj on Friday. The two sides are set to meet in Tunisia next month to appoint a unity government.
While Libya has been in chaos since a 2011 revolt that overthrew former dictator Muammar al-Qaddafi, its oil industry has proved resilient. A rise in production from mid-2016 proved more sustainable than many traders expected, with the country’s output averaging around 1 million barrels a day in both 2018 and 2019.
The speed of the latest recovery has again taken markets by surprise and put pressure on oil prices, which have been hammered since the virus spread around the world. Brent crude dropped 1.8 per cent to $41.06 per barrel as of 10:45 a.m. in London, deepening its fall this year to 38 per cent.