Oil prices rise amid stifled Libyan export capacity

Head of planning at Libya’s state-run National Oil Co., Samir Kamal, told The Wall Street Journal on Monday that a “force majeure” had occurred at the terminals of Es Sider and Ras Lanuf, interrupting oil flows from supplying fields.

The disruption in the region was caused by Islamist militias, who launched an armed attack over the weekend against what they decry as forces loyal to an internationally-recognized government based in eastern Libya.

Combined the affected sites ship a combined 560,000 barrels a day, equating to nearly half of the country’s export capacity of 1.3m barrels a day.

Following the fighting, the price of crude oil bounced back by more than a dollar after hitting a five-year low of $60 per barrel on Friday. Brent Crude on London’s ICE futures exchange was up 1.13% at $62.55 per barrel as of 14:10 on Monday.

However, analysts argued the fall-out from the violence in Libya highlighted the fragile state of the oil market and how supply disruptions could alter market dynamics.

Analyst at Energy Aspects Richard Mallinson said: “Given the extent of oversupply predicted for the first half of 2015, even unexpected losses on this scale would not be enough to rebalance fundamentals on their own, unless they last for a prolonged period of time.

“However, the fact Libyan production has fallen by around 500,000 barrels per day from the highs briefly reached in October underlines how rapidly supply disruptions can alter. With the fall in oil prices threatening to destabilise a range of already cash-strapped producers (Venezuela, Iraq, Libya) the market should not get complacent about the risks posed by supply disruptions, particularly into the second half of 2015 when balances should begin to improve again.”

The global price of crude has fallen more than 45% since the summer as producers have ramped up output even as demand for the commodity has weakened.