Libya is seeing a slow recovery in crude oil exports

Libya’s crude oil exports are expected to fall by at least 300,000 barrels per day (bpd) in September, despite a modest recovery in output. Analysts at FGE reported that Libya’s crude output has risen by about 200,000 bpd since the start of the month, now standing between 650,000 and 700,000 bpd. However, exports from western Libya are expected to remain minimal due to the force majeure at the country’s two major oil fields: El Sharara, which produces 270,000 bpd, and the El Feel field, which produces 70,000 bpd.

FGE sees total Libyan crude production in September between 750,000 bpd and 800,000 bpd.

Libyan ports saw an increase in crude cargoes, with exports expected to rise to 370,000 bpd this week and 490,000 bpd next week. However, the overall outlook for the OPEC member’s near-term exports is uncertain. August exports were supported at more than 1 million bpd, thanks in part to crude stockpiles. With much of this stored oil now depleted, FGE expects Libya’s September exports to drop sharply. Total deliveries in September will average below 700,000 bpd, the forecast shows — 300,000 bpd fewer than the previous month, assuming force majeure remains in place.

This is a combination of increased exports to eastern Libya and decreased exports from western ports due to force majeure at the Sharara and El Feel oil fields, which feel the port of Zawia and the Mellitah terminal respectively.

A nationwide shutdown of oil fields was triggered on August 26 by Libya’s eastern regime after the Western government sacked the head of the Central Bank, Sadiq al-Kabir. Although an agreement was reached on September 3 to appoint a new head of the central bank within 30 days, tensions remain high and many observers worry that the agreement may not hold. The leader of the eastern House of Representatives said the oil blockade would continue until al-Kabir was restored.

This uncertainty leaves Libya’s oil sector in a precarious position, with analysts warning that the ongoing political impasse could prevent a full recovery in crude exports in the near future.

By Julianne Geiger for Oilprice.com

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