Libya’s increasingly brutal civil war is smashing the north African state’s oil production, which has been slashed by about 80% in less than half a year.
Less than a year ago, some people were getting much more positive about Libya’s oil industry, which at its peak could produce close to one and a half million barrels per day, according to the Financial Times.
“Force majeure” was being lifted from two ports at the time — that’s a legal ruling that means companies can’t sue for violated contracts when there’s a war or some other unpredictable disruption.
But now the country seems to be falling into chaos again, oil fields are under attack and the Islamic State (formerly ISIS) is gaining a foothold in parts of the country, adding to the already chaotic atmosphere.
This chart from Goldman Sachs shows just how volatile oil production in Libya has been, and how much it has been reduced:
Here’s what Goldman’s analysts say:
The deepening civil war in Libya, with force majeure declared at 11 oil fields, may continue to impact local production, although further downside is limited given low production levels. This leaves risk to Libyan production as skewed to the upside, albeit with uncertainty on the potential for a sharp rebound.
Effectively, production is now so low that the only major surprise for global oil markets is if it suddenly surges. Libya has lost over 700,000 barrels per day in production since Autumn last year, and it would now have to lose less than 200,000 to drop to nothing at all.
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