Libya Resumes Oil Production as Leadership Dispute Ends

Petroleum Price

• Oil prices inched up in early Asian trading hours on Friday, holding on to their strong weekly gains, as investors weighed the Middle East conflict and the potential disruption in crude flows against an amply-supplied global market.
• Brent crude futures were up 9 cents, or 0.12%, to $77.71 a barrel as of 0010 GMT. US. West Texas Intermediate crude futures were up 8 cents, or 0.11%, to $73.79 a barrel. MCX Crude oil prices opened at 6192 with a gain of 0.50%.

Petroleum Demand and Supply

• The supply fears have been tempered by OPEC’s spare production capacity and the fact that global crude supplies have yet to be disrupted by the Middle East unrest.
• Libya’s eastern-based government and Tripoli-based National Oil Corp announced on Thursday the reopening of all oilfields and export terminals after a dispute over leadership of the central bank was resolved, ending a crisis that had heavily reduced oil production.
• Iran and Libya are both members of OPEC. Iran, which is operating under U.S. sanctions, produced about 4.0 million barrels per day of fuel in 2023, while Libya produced about 1.3 million bpd last year, according to data from the U.S. Energy Information Administration.
• The National Oil Corporation previously blamed the shutdown on the Fezzan Movement, a local protest group. However, Libyan local media reported that the suspension was placed due to retaliation by military commander Khalifa Hifteragainst a Spanish company that partially operates the Sharara field for an arrest warrant issued by Spanish authorities accusing him of arms smuggling.

Petroleum News

• The escalating tensions in the Middle East have sparked concerns among Indian investors, as the region's instability impacts crude oil prices and India's trade relationships.
• The war can affect various sectors due to increased crude oil rates, trade tensions, and supply chain disruptions. It impacts the domestic market including defence, pharmaceuticals, diamond, port & shipping industries sectors.
• Prices ramped up to fresh six-week highs in the previous session on growing speculation that Israel would target Iran's oil infrastructure in retaliation for Tuesday's missile attack.
• It was enough to send benchmarks to fresh highs and while Pentagon officials declined to offer further details, speculation intensified for an Israeli response as early as this weekend.

Expert Opinion

• Around 1.5 million BPD of this oil is exported, primarily to China, while analysts have noted that OPEC+ spare capacity of around 6 million BPD could easily cover for any Iranian shortfalls.
• Macroeconomics have largely taken a backseat in the second half of the week, although traders were waiting on Friday's US Non-Farm Payroll report.