The flow of Libyan oil to the world market is already slowing, but may soon shut down completely if civil unrest causes more instability.
Libya is the 12th-largest crude oil exporter in the world and Africa’s 3rd largest oil producer.
According to the International Energy Agency (IEA), Libya’s oil production before the unrest began was 1.6 million barrels a day, with most of it going to Europe.
The reduction in Libya’s production is starting to greatly affect Europe’s oil supplies.
The IEA estimated 850,000-1 million barrels per day of production is being shut inside Libya.
Part of this is due to foreign workers and technicians leaving because they no longer feel safe in the country as loyalists and rebels duke it out.
The regimes instability has also caused most foreign oil companies to either shut down or suspend operations.
The decrease in supply from Libya has led to rising oil prices.
Oil is well above $100 a barrel with Brent Crude at $116.
Gas is also up. Projections call for $5 a gallon.
Although we are feeling the affects of Libyan unrest today, the world oil market has endured worst supply shifts before, such as during the Iranian Revolution in the late 1970s.
Not to mention the oil market is looking elsewhere along the Mediterranean for supplies to curb Libya’s shortage of supply.
Oil companies are seeking additional cargoes from Algeria, Sidi Kerir in Egypt and Ceyhan in Turkey.
These oil producers will benefit, along with oil producers in safer more stable regions, especially if Libyan oil supply stops altogether.
Until next time,
Kaitlin
