Libyan Conflict Boosts Oil Prices
Oil prices showed some fight against the persistent declines that have affected the global market.
Monday, December 15, 2014 - 00:00
Unfortunately, it was conflict in Libya that interrupted the flow of exports rather than reliable policy changes.
Crude oil has dropped over 45% from the summer, egged on by OPEC’s decision to maintain output and by the International Energy Agency’s reduced forecast for demand growth. As a result, gasoline prices are below $3 per gallon in many areas but energy companies are struggling.
Stocks in Europe rose on Monday following the oil price gains. The Stoxx Europe 600 gained 0.7% this morning after a nearly 6% drop last week – the sharpest weekly decline since September 2011. Germany’s DAX 30 added 0.8%, while France’s CAC 40 and the UK’s FTSE 100 both rose 0.9%.
Libyan parties vie for control of oil platforms
Libya’s internationally recognized government launched air strikes against targets near eastern oil ports to halt the advance of a rival militia over the weekend, according to Reuters. The competing Libyan factions have clashed over oil reserves and the country’s government.
The ports in question – Ras Lanuf and Es Sider – are two of Libya’s largest and account for over 300,000 barrels of exports per day. They are both operating normally.
The rival government in Tripoli initiated an offensive to seize the oil ports from the command of Prime Minister Abdullah al-Thinni’s allies. Those include former army general Khalifa Haftar and his forces.
"We are a third force commissioned by the chief of staff Abdulsalam Jadallah and commander-in-chief Nouri Abu Sahmain," rival militia commander Tarek Eshnaina told Reuters. "We were about one kilometer from the main gate of Es Sider oil port, but we had to withdraw about two kilometers after Haftar's planes carried out air strikes, which killed two of our members and wounded three.”
With the strife in Libya and the possession of the nation’s ample oil exports up in the air, prices lifted off their recent lows. However, as the situation unfolds investors will be watching closely. It is difficult to say whether or not the prices increase will continue – it is likely that prices will fluctuate.
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