A prolonged outage from Libya could drive oil prices back above $60 per barrel

Thick black smoke rises out of a storage tank at Es Sider oil facility, west of Benghazi, after it is struck by a Grad rocket

Smoke billows out of an oil tank in the port of Es Sider, eastern Libya, after being hit by a rocket on Christmas Day Photo: APYV
 
By  Andrew Critchlow, Commodities editor

Fire is still threatening one of Libya’s largest oil export terminals after a battle between government forces and the opposition militia known as Libya Dawn.

The blaze at the Es Sider port has already engulfed five giant oil storage bunkers and any long-term disruption to exports from the facility could help to put a floor under the tumbling price of crude.

Libyan officials have said that 850,000 barrels of crude oil have been lost because of the fire. Es Sider can hold more than 6m barrels and is one of the North Africa country’s main export hubs.

Brent crude ended last week again lower at $59.45 per barrel, but fear over the reliability of supplies from Libya could push the price up again this week.

Oil has lost about 45pc of its value since June and that decline has partly coincided with the return of significant volumes of crude from Libya. Supplies to European refiners from the country, which has been ravaged by civil war since the overthrow of Colonel Muammar Gaddafi, have been repeatedly interrupted.

Once the largest oil producer in Africa, Libya’s output averaged 580,000 barrels per day in November, down from 1.59m bpd at the end of 2010, according to Bloomberg data. However, production is thought to have dropped to as low as 352,000 bpd since the current outbreak of violence between forces loyal to the elected government in Tobruk and extremists who now control the capital, Tripoli.

Earlier this month, Libya was forced to shut down the El Sharara oilfield – one of the country’s largest – because of an armed clash between two warring tribes in the neighbouring Murzuq desert. The field, which is now back in production, can pump around 200,000 bpd of crude.

The rebels in Tripoli have openly challenged the government’s control of Libya’s vast oil wealth and appear to be increasingly targeting energy facilities. In November, Libya Dawn’s self-appointed oil minister threatened to attend an Opec meeting in place of the nation’s official oil chief.

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