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Oil prices were rising on Thursday afternoon as supply outages continue to pile up in oil markets.
This morning, Libya’s Oil Minister Mohamed Oun confirmed to Argus Media that the 70,000 bpd El Feel oilfield had been shut down by protestors. Argus reported that the protestors were angered by the recent arrest of former finance minister Faraj Boumtari in Tripoli.
Rumors surfaced on social media this morning that Libya’s giant Sharara field was also shut down, but Libyan news outlet Al-Ahrar tv confirmed that the oilfield continued to operate under normal circumstances this morning U.S. time. But around 1:30 PM U.S. Central Time, reports started to surface that operations had been halted at the Sharara oil field due to protests.
Two Engineers working at the oilfield told Reuters that production slowed on Thursday with the field expected to be totally shut down by Friday.
Libya’s Sharara oil field is capable of producing almost 300,000 bpd of crude oil and is owned by Libya’s National Oil Company, TotalEnergies, Repsol and OMV.
Crude prices responded immediately with WTI trading at $77.06 per barrel, up 1.7% on the day, while a barrel of Brent changed hands for $81.54, up 1.79%.
Already this morning, Rebecca Babin, a senior energy trader at CIBC Private Wealth told Bloomberg that the risk of further outages in Libya was soaring as a result of the protests at the El Feel oilfield. Stating that “Current production at risk is likely 60,000-90,000 barrels, but the knock-on effect could be much larger,”.
On Monday, Oilprice.com’s Simon Watkins wrote that Libya could be the next wildcard for oil markets, given the ongoing discord about the distribution of the country’s oil revenues. Last week saw Khalifa Haftar, the head of the Libyan National Army (LNA) that is based in the country’s oil-rich eastern region, order his forces to be standby until a fair distribution of oil wealth is agreed between the leaders of its main warring factions.
Watkins notes that last time the General ordered his troops to be on standby, Libyan oil production effectively collapsed from 1.2 million bpd to near zero barrels per day.
By Tom Kool for Oilprice.com
Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations