Though the price of crude oil may be slackening as rebels take over Libya, US crude prices have risen. According to CNN Money, US crude rose 2% to $83.46 per barrel. The Guardian reports that Brent crude oil fell over 3% to $105.15.
Having seized Col. Muammar el-Qaddafi’s Tripoli compound and offering an almost $2 million bounty for him, Libyan rebel fighters are currently in control of 80% of the capital city, reports the Guardian. A change of government will impact on oil prices in Libya. While oil prices would surely be pushed down with a less precarious future in sight, oil production will not recover overnight as it will take time to fully rebuild the government and rehabilitate oil facilities.
Up until the Libyan civil war in February, Libya had been averaging at around a 1.8 million barrel-a-day rate of production, reports CNN Money. Though this represented a mere 2% of the world’s oil, Libya’s product is of a particularly high standard calling for less refining than oil from other sources.
Frozen Assets To Be Used To Rebuild Libya
The New York Times reports that analysts have appraised frozen Libyan assets throughout the world to be worth somewhere in the region of $160 billion.
Gaddafi’s opposition called for $5 billion in frozen assets to be made available to keep necessary services available and to begin the rehabilitation of oil facilities, according to the Guardian.
The South African government blocked the release of $1.5 billion claiming it would imply recognition of the Transitional National Council. However, the United Nations Security Council is allowing the release of $1.5 billion in order to keep necessary services available and to begin rebuilding the government.
The New York times reports a third of the $1.5 billion will be used to settle accounts with organizations providing Libya with humanitarian aid, another third will be transferred from US accounts to companies that have been providing fuel to maintain power in locations controlled by rebels, and the remaining third will be used for vital provisions such as food and healthcare.
Italian oil company Eni is the number-one producer of oil in Libya and has vowed to provide emergency diesel fuel and gasoline, and delay payment until after crude oil production has started up again in Libya.
Key Statistics – Oil in Libya (source: Reuters)
- State-owned National Oil Corporation and its subsidiaries represent roughly half of Libya’s oil output.
- The EU imports more than 85% of Libya’s crude oil exports with almost a third of Libyan oil being imported by Italy, under 15% to Germany, 10% to France and China, and a mere 5% to the US.
- Libya consumes only 270,000 barrels of oil on a daily basis.
- Among the foreign oil companies active in Libya are Shell, BP, Eni, Statoil Hydro and Occidental Petroleum.