Production disruptions imminent in Libya – Commerzbank

In a political dispute with the government in the west, the government in the east of the country has imposed a freeze on oil production and exports, notes Barbara Lambrecht, commodities strategist at Commerzbank.

The risk of a long-term deficit is reduced

“Most of the country’s oil production facilities and export terminals, which recently produced about 1.1 million barrels per day and mainly supply the European market, are located in the east. A smaller oil field with a daily production of 70,000 barrels has already been shut down, according to informed sources.”

“The fact that the market has so far reacted with only limited alarm at the order is likely due to the fact that Libyan production has often been subject to strong short-term fluctuations due to the country’s political instability. However, the country is heavily dependent on revenue from oil sales, which reduces the risk of a long-term deficit.”