In a political dispute with the government in the west, the government in the east of the country has imposed an oil production and export freeze, Commerzbank’s commodity strategist Barbara Lambrecht notes.
The risk of a long-term shortfall is reduced
“Most of the country's oil production facilities and export terminals, which recently produced around 1.1 million barrels per day and primarily supplies 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 only reacted with limited alarm to the order is probably 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 strongly dependent on income from oil sales, which reduces the risk of a long-term shortfall.”
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