DTN Weekly Oil Update
Oil Futures Jump on Libyan Production Halt Threat
VIENNA (DTN) -- Oil futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange jumped more than $2.20 barrel (bbl) Monday morning, after the eastern Libyan government announced to halt all crude oil exports and production from the country, affecting up to around 1% of global output.
Libya's LNA government announced it will halt all crude oil exports and throttle production. Most of the country's oilfields and major export terminals are under de facto control by the LNA, either by direct territorial control or via the LNA-aligned Petroleum Facilities Guard. The country's largest oil field, El Sharara, was shut down last month by LNA aligned protesters, leaving only offshore production and the El Feel field in the hands of the western government. Producers in the east have already announced to gradually curb output, affecting some 100,000 to 200,000 barrels per day (bpd). Overall, Libya produced 1.175 million bpd last month, according to secondary sources polled by OPEC.
A prolonged conflict would threaten the global balance to tilt toward a larger deficit. Most of the missing global supply, however, is still artificially induced by the OPEC+ coalition. As a result, the producer group sits on more than 4.5 million bpd of spare production capacity which can more than make up for a total shutdown of Libyan production, should the group decide to stick to output hikes starting in October.
Near 11:00 a.m. EDT, WTI futures for October delivery were trading near $77.22 bbl, up $2.39, and Brent for October delivery hovered around $81.22 bbl, up $2.20. RBOB and ULSD for September delivery gained $0.0186 gal and $0.0561 gal, respectively.
Karim Bastati can be reached at karim.bastati@dtn.com
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