Libya has continued its return to large-scale production by breaking through the million barrels per day (bpd) threshold.
The country is now almost back to the 1.2 million bpd it was pumping before forces loyal to Khalifa Haftar blockaded some of the countries terminals and largest oil fields, sending production down to as little as 100,000 bpd.
In September, the Libyan forces loyal to Haftar announced an end to the blockade, allowing the state-owned Libyan National Oil Corporation (NOC) to begin scaling up production again. The company noted, however, that pumping may need to be scaled back due to unnamed obstacles to work activities.
Libyan light crude is highly valued, and a return will help restore the country’s revenue. The NOC says it has lost some $10 billion in revenue due to the blockade.
A return to stability in the country may also encourage international oil companies – such as Eni and BP, the oil major behind the Castrol lubricant range – to resume their exploration activities in the country. The dramatic rise in production may present some challenges to the OPEC+ group’s efforts to balance production with demand. The Emirates NBD bank’s Senior Director of Market Economics, Edward Bell, pointed to it driving lower oil prices:
“The immediate catalyst for lower prices appears to be market expectation that Libya’s production is going to recover back to pre-civil war levels of more than 1 million bpd in the next few weeks.”
Libya’s allocated OPEC quota is 1.7 million bpd, leaving it some scope to increase production further.