The return of Libyan crude oil production, which had plummeted due to a political crisis, is now affecting the European crude market by creating a surplus and driving down prices. Key points include:
Production Resumption: Libya’s National Oil Corporation (NOC) restarted production on October 3, reaching approximately 1.3 million barrels per day by October 13, nearing pre-crisis levels.
Market Dynamics: This increase coincides with maintenance shutdowns at several European refineries, particularly in the Mediterranean and northwest Europe, which has led to a decrease in crude prices.
Price Adjustments: The premium for Azerbaijan’s Azeri Light crude over Brent has dropped to $1.55 a barrel, the lowest since April. Other Mediterranean crude grades have also seen weakening differentials.
Future Expectations: Analysts anticipate further price pressure as other fields, such as Kashagan, return from maintenance after November 10. Prices for West African crudes are also expected to decline.
Libya’s crude exports had fallen to about 550,000 bpd in September but are recovering, with October exports projected to exceed 600,000 bpd.