(News Bulletin 247) – The government of eastern Libya has decided to suspend its production and exports. Black gold is progressing significantly.
Oil is back on track this Monday. The two main contracts on black gold, North Sea Brent and WTI listed in New York, are both up more than 2%, to $79.78 per barrel for the former and $76.53 per barrel for the latter.
The two oil benchmarks have especially accelerated their progression after information from Libya, the third largest producer of liquid petroleum in Africa, after Algeria and Nigeria.
Political instability has gripped the country since 2011 and the death of Muammar Gaddafi. The country is governed by two rival executives, one based in the West and located in Tripoli (and recognized by the UN) and the other in the East.
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A country torn between two executives
According to Bloomberg, the eastern government has decided to halt its oil production and exports after the western executive decided to change the head of the country’s central bank. The west is looking to replace Sadiq al-Kabir, as the country’s central bank plays a critical role.
“The central bank is the sole internationally recognised custodian of Libya’s oil revenues, which provide vital economic income for a country torn apart by years of fighting,” Reuters said.
The Eastern government invoked “force majeure”, an exceptional circumstance allowing, under certain conditions, the non-compliance with contractual obligations.
According to Bloomberg, Libya produces about 1.15 million barrels per day of oil. By comparison, global demand is about 100 million barrels per day.
Before the news from Libya, oil prices had edged higher following news from the Middle East. Israel said Sunday it had launched multiple airstrikes in Lebanon after foiling a major Hezbollah attack.
“Geopolitical risk factors will likely influence the oil market significantly,” Kelvin Wong, senior market analyst at OANDA in Singapore, was quoted as saying by Reuters.
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