London — Libya is producing more than 1 million b/d of oil, an increase of almost 500,000 b/d in just over two weeks, after its two rival-warring factions agreed to a peace deal on Oct. 23., state-owned National Oil Corp. said Nov. 7.
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The North African producer had seen its output fall to less than 100,000 b/d in recent months as an eight-month oil blockade temporarily crippled its oil sector.
The sudden surge in Libyan output comes at a very tricky time for the oil market, which is coping with a fragile demand outlook amid a second wave of coronavirus infections.
The extra Libyan supply means OPEC+ will have to make some difficult choices as it heads to its formal meeting on Nov 30 – Dec. 1. The coalition was looking to trim its output cuts in 2021 but fading demand growth along with Libya's resurgence are likely to thwart its initial plans.
Libya was pumping 1,036,035 b/d on Nov 7, the NOC said, making it the first time in recent months that the state-owned company has publicly divulged an output figure.
NOC has reached the coveted 1 million b/d figure even faster than it had initially expected. On Oct. 23, NOC said Libya output would reach 800,000 b/d in two weeks and it would exceed 1 million b/d within four weeks.
NOC, however, said it may struggle to sustain these production levels if political and financial stability are not maintained.
It said that the beleaguered oil sector is facing huge financial difficulties, including a debt accumulation at many of its subsidiaries, along with a significant delay in the salaries of its employees.
On Jan. 18, eastern tribes, supported by the Libyan National Army, halted exports from five key oil terminals, which reduced the country's crude production to the lowest since the 2011 civil war.
Libya's oil production had fallen to as low as 70,000 b/d in recent months from around 1.1 million b/d before the blockade in January.
The blockade was only lifted by LNA in mid-September and now all of the country's oil terminal and fields are fully open.
Libya holds Africa's largest proven reserves of oil, and its main light sweet Es Sider and Sharara export crudes are sought after by refineries in the Mediterranean and Northwest Europe for their gasoline and middle distillate yields.