Oil prices fell on Thursday as the death toll from the new corona virus in China climbed to 170 and more airlines cancelled flights.
Brent was down 35 cents, or 0.6%, to $59.46 a barrel while US WTI crude was down 30 cents, or 0.6%, to $53 a barrel.
By Midday Friday, prices fell further Brent at $57.75 and WTI at $52.42.
This shouldn’t be happening. Not after the latest OPEC output cut by an extra 500,000 barrels per day in the first quarter of 2020.
Recession are also gone. Brexit impacts won’t be felt for another year until the UK resolves its trade relations with the EU and the US among others.
But something is developing in OPEC member Libya that will turn this thing around.
Blockade to the aid
Blockades of Libya’s export terminals risk cutting off virtually all of the 1.2 million barrels per day in crude oil exports, warned the chairman of Libya’s National Oil Company (NOC), Mustafa Sanalla.
The country was targeting long-term production of 2.1 million bpd by 2024.
Earlier this month, forces loyal to general Khalifa Haftar seized Libya’s oil export terminals. This follows a years-long campaign to capture the capital of Tripoli Oil production has suffered intermittent disruptions, but has recently remained out of the line of fire.
Libya’s crude exports have already dropped to just 262,000 barrels per day and could fall below 100,000 barrels per day, Sanalla earlier told Bloomberg TV, down from around 1.2 million barrels per day.
Blockades of Libya’s Brega, Ras Lanuf, Hariga, Zueitina, and Sidra ports are costing the country $55 million dollars per day in lost revenue.
For the rest of the world, less oil export (1 million barrels less and counting) could translate into higher prices.
Libya’s oil output could be days from coming to a complete halt.
The crisis escalated earlier this month, crippling oil production, closing export terminals and forcing the National Oil Corporation (NOC) to declare force majeure on supplies, which can allow Libya to legally suspend delivery contracts.
The closure of oil ports resulted in losses totaling $318 million, the NOC has said, the highest level in six years.
General Haftar’s aim to turn off Libya’s oil production is a $77 million-dollar per day gamble. The blockade will also cost Libya between 500,000 and 800,000 bpd in lost oil production, according to different reports. This will put a crippling pressure on the country that needs this major source of revenue to its coffers.