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A new wave of coronavirus lockdowns is already slowing oil’s price recovery. Now, commodity traders have a new headache: Libya.
The civil-war-torn country’s oil industry has been all but shut down since January. But it looks as if exports will restart imminently thanks to a truce and an agreement between the main factions over the past week to share petrodollars more evenly. A return of Libyan barrels would come amid volatility in crude as virus cases accelerate.
It’s still early days in Libya — and previous agreements to reopen the oil sector have failed. But the state energy firm is predicting supply will roughly triple this week to 260,000 bpd. Goldman Sachs reckons exports could reach double that by year-end, while Bloomberg Intelligence thinks a figure of close to 1 million is possible.
That might not seem like much in the context of the global market. But OPEC+’s massive supply cuts since April mean any additional output can put downward pressure on prices. If things go smoothly in Libya, an extra million bpd of oil could be online. That can only be bad for oil bulls.
