Coronavirus: Oil prices slump over prolonged restrictions, Libya resumes production

Crude oil prices slumped on Monday over increasing concerns over prolonged coronavirus restrictions and the resumption of oil production by Libya’s National Oil Corporation (NOC) from certain fields and some exports of crude oil.

The oil company added that it will only restart production at safe fields and exports from safe ports.

The American headline crude, the WTI declined by about 5% to $39 per barrel while the Brent crude declined by 4.13% to $41.37 per barrel.

Oil traders are panicky over the potential hit on oil prices following higher output in Libya as it resumes production

NOC’s Chairman, Mustapha Sanalla, “Our main concern is to start production and exports taking into account the safety of workers and operations, as well as to prevent any attempts to politicize the national oil sector, which means that the NOC is doing its technical and non-political mission to resume operations in the safe areas and technical evaluation is underway in preparation for the start of production and exports.”

The company said the force majeure will be lifted from fields and ports that are free of the presence of paramilitary groups and mercenaries but remain in effect for those where there are still such groups, which will disrupt the work of NOC.

The head of the Libyan National Army, General Khalifa Haftar, whose troops, with assistance from other affiliated groups, shut Libya’s oil ports in January, announced the end of the blockade on Friday. This was on the same day, NOC’s Sanalla disclosed that the force majeure will only be lifted from facilities after they are demilitarized.

The blockade by the military had driven down the oil production in Libya to the current 100,000 barrels per day as against the 1.2 million barrel per day at the beginning of the year.

This latest development is likely to reverse the improvement in oil prices that followed the latest meeting of OPEC+, which gave a glimmer of hope for supply, if not demand.