1.2 million barrels per day of production is idled
One of the reasons cited for the rebound in oil prices on Monday is fighting in Libya but it may be a case of a short-term gain leading to long-term pain.
Government forces are fighting to retake critical oil infrastructure and they've declared retaking it a priority. Today, a spokesman said they have retaken the coastal town of Ben Jawad from Islamic State.
The nearby Es Sider and nearby Ras Lanuf oil ports, between Sirte and Benghazi on the Mediterranean coast, have been closed for more than a year. Production is largely located in government-controlled areas but it's a challenge to export.
In the bigger picture, there is no unified government in Libya. The Eastern part of the country is separately run. They even have a separate bank and are issuing separate currencies. The Wall Street Journal has reported that the central bank in the east holds nearly $185m in gold and silver coins in its British-made vault, but is unable to access it because the code is retained by the Tripoli central bank.
A recent deal between the central and Eastern government ended a blockade of Eastern oil and released 100,000 bpd of production but much of the problem is simply a matter of deal-making and creating a stable government. Sometimes that takes weeks, other times years.
When it happens, national oil company Chairman Mustafa Sanalla (who is part of the central government) said output could triple in weeks to 600K bpd from 200k bpd and he targets 1 mbpd by year end.
"In the next days or next weeks, we will see the formation of one united national oil company," he said a month ago. That day hasn't come but it's creeping closer.
