Is Libya the current Iran for oil markets?

[jose chalhoub + 388]

Since end of last week Libya has been a little bit of a headache for oil markets as 2 of its ports have been showing signs of interruption and impacting over libyan oil output and spike of prices, even with the outlook for extra barrels after OPEC+ meeting agreed this. Libya once again making bearish headlines for oil prices. But will it represent something like what will happen with the full entrance of sanctions against Iran's oil and gas exports in November? What should worry the most to european markets? Libya closest position to european markets, plus the migration crisis from libyan soil as an added issue or Iran sanctions? 

[Rodent + 1,424]

13 minutes ago, jose chalhoub said:

Since end of last week Libya has been a little bit of a headache for oil markets as 2 of its ports have been showing signs of interruption and impacting over libyan oil output and spike of prices, even with the outlook for extra barrels after OPEC+ meeting agreed this. Libya once again making bearish headlines for oil prices. But will it represent something like what will happen with the full entrance of sanctions against Iran's oil and gas exports in November? What should worry the most to european markets? Libya closest position to european markets, plus the migration crisis from libyan soil as an added issue or Iran sanctions? 

I would be more concerned with what it means for Libya rather than for the global oil market in general. 82% of Libya's export revenue comes from oil. Their oil production is all but shut completely down. 

Biggest customers are Italy, France, and then China. But Italy, which takes roughly a third of all of Libya's oil, is seeing a steady decline in oil imports. Besides, Russia is Italy's second biggest oil supplier, so I'm not sure that will upset Italy's apple cart too much. We all know Russia has some spare capacity in their back pocket.  Saudi Arabia is the third largest supplier to Italy. They claim to have excess capacity as well. Between Russia and Saudi Arabia, I'm sure they can absorb whatever Libya cannot supply.

Libya, on the other hand, will be penniless with an extended force majeure.

[jose chalhoub + 388]

1 minute ago, Rodent said:

I would be more concerned with what it means for Libya rather than for the global oil market in general. 82% of Libya's export revenue comes from oil. Their oil production is all but shut completely down. 

Biggest customers are Italy, France, and then China. But Italy, which takes roughly a third of all of Libya's oil, is seeing a steady decline in oil imports. Besides, Russia is Italy's second biggest oil supplier, so I'm not sure that will upset Italy's apple cart too much. We all know Russia has some spare capacity in their back pocket.  Saudi Arabia is the third largest supplier to Italy. They claim to have excess capacity as well. Between Russia and Saudi Arabia, I'm sure they can absorb whatever Libya cannot supply.

Libya, on the other hand, will be penniless with an extended force majeure.

Yup, Libya does not matter much for global oil markets. And add to this the continued political instability and Libya cant catch a break since it was invaded... 

[Rodent + 1,424]

4 minutes ago, jose chalhoub said:

Yup, Libya does not matter much for global oil markets. And add to this the continued political instability and Libya cant catch a break since it was invaded... 

I believe the historians have decided that the correct word here is "intervention".

 

[Tom Kirkman + 8,860]

2 hours ago, Rodent said:

I believe the historians have decided that the correct word here is "intervention".

Gaddafi might have some quibbles about that term.

[Jan van Eck + 7,558]

3 hours ago, Rodent said:

 

. Besides, Russia is Italy's second biggest oil supplier, so I'm not sure that will upset Italy's apple cart too much. We all know Russia has some spare capacity in their back pocket. 

Libya, on the other hand, will be penniless with an extended force majeure.

Meanwhile, there is this other report that there are four supertankers, called VLCC's  (Very large crude carriers) each filled with 2 million bbls, sitting off some port in SE China for the past two months, apparently due to a depressed Chinese market for supply.  It is costing BP some $50,000 a day for each tanker just to sit there.  And apparently there are lots of these tankers sitting around waiting for someone to buy the cargo.  You would think that at some point Italy would and could simply buy oil from the traders, and forget ab out Russia.  Given the US distaste for anyone having truck with the Russians, it might be smart to quietly distance yourselves from Mr. Putin. 

As far as Libya not receiving revenues, you have to ask yourself: what would the revenues flow to?  There does not seem to be a working government.  Oil revenues are not exactly being used for social services in the East, that is the whole reason tha Eastern militia seized those ports.  So the presumption is that oil money is being corruptly taken in Tripoli, and is being used to fund the Tripoli army, again corruptly.  It might not be a bad thing for that govt to be bereft of fresh cash.  Hey, who knows, just sayin'. 

[jose chalhoub + 388]

Also there is the uncertainty about potential upcoming presidential elections in Libya although not certain about its feasibility this year. For me Libya represents now the most intriguing and interesting geopolitical case for global oil markets today. 

[jose chalhoub + 388]

Also its interesting and geopolitically relevant for Europe since Russia has been in many ways taking Libya as its next Syria and has been allegedly gaining further strongholds in the country. 

[jose chalhoub + 388]

Interesting developments in the North African region and it seems Libya is not being the most stable of oil and gas producing countries so far. 

[Guillaume Albasini + 851]

See the Guardian article

https://www.theguardian.com/world/2018/jul/02/four-libya-oil-ports-closed-amid-corruption-allegations-allies-khalifa-haftar

Libya’s United Nations-backed National Oil Corporation (NOC) has closed four oil ports held by the military chief Khalifa Haftar, collapsing the country’s hydrocarbons production.

The NOC has also written to the UN sanctions committee and foreign embassies with evidence that it says shows Haftar’s allies have for years been offering questionable contracts in breach of UN resolutions, that would lead to millions in dollars of oil revenues being siphoned out of the Libyan economy.

Fighting last month resulted in the deaths of 300 people when the four ports were attacked by a local militia and then recaptured by Haftar’s Libyan National Army (LNA), which controls most of east Libya.

But the LNA provoked outrage when it announced that oil exports would no longer be under the control of the Tripoli-based NOC, and instead would be handed to a rival corporation based in Benghazi. The LNA, and its political allies in the east of Libya, accuse Tripoli’s Central Bank governors of failing to stop some oil revenues funding militias.

Some of Haftar’s allies believe he is determined to use his leverage to win control of the Central Bank.

France, which has previously been seen as sympathetic to Haftar, is said to be furious with him, warning him he faces a political backlash if he continues on the current course. But Haftar’s two biggest external allies – Egypt and the United Arab Emirates – have not turned against him, and a key test is whether the UAE buys Libyan oil outside of the NOC structures.

[Guillaume Albasini + 851]

After the reopening the four ports in the East, tankers are back to load libyan oil. On Marinetraffic we can see the AEGEAN VISION in Ras Lanuf, FRANKOPAN in Brega and JEMMA in Benghazi.

And another good news from Libya with the reopening of the El-Feel oilfield in the South. It will add 72'000 bpd to Libyan production :

https://www.libyaobserver.ly/economy/libyas-state-oil-firm-lifts-force-majeure-el-feel-oilfield