By Daniel Jones
In this article, I decided to look at some recent oil-related data pertaining to Libya. Overall, the picture facing the country has recently materially worsened and hundreds of thousands of barrels per day are offline.
Uncertainty regarding the nation could cause a bumpy ride but, for now, there is no denying that the data is bullish for oil investors.
In recent weeks, we have seen a significant change in oil production, on a preliminary basis, coming from Libya. While many market participants may not consider Libya to be an important area to focus on, especially since the nation produces just over 1% of global oil output, the wild swings in output from the nation in recent years has had both bullish and now bearish impacts on the global energy markets.
In what follows, I will dig into some events that have taken place in the OPEC nation’s borders and give my reasoning behind why the oil market should be reacting in a positive light to these developments even though it hasn’t yet.
A look at Libya’s oil production recently
Over the past couple of years, the amount of oil produced within Libya has been quite small, not only by global standards but also compared to what the nation has produced in the past.
Following the Libyan revolution in 2011, a man named Ibrahim Jadhran was appointed to the position of leader over the Petroleum Facilities Guards, an arm of the military tasked with protecting the nation’s oil reserves.
In 2012, he denounced the Muslim Brotherhood that had been ruling central Libya and broke his forces off so as to fight for some degree of autonomy for oil-producing regions within the nation.
The end result has been quite volatile. While Libya produced, back in 2006, 1.702 million barrels of oil per day, that number plummeted during the Libyan revolution and even after that ended in 2011 the amount of oil produced by the nation remained low.
According to OPEC, output in 2015 averaged 0.404 million barrels per day. In 2016, it had declined to 0.390 million barrels per day.
That represents a decrease of 1.312 million barrels per day from a decade earlier and certainly helped the global oil glut to not worsen further.