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Libya’s Crude Oil Production Could Impact Crude Oil Prices

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Libya’s crude oil production  

Libya is a member of OPEC (Organization of the Petroleum Exporting Countries). The EIA (U.S. Energy Information Administration) estimates that Libya’s crude oil production rose by 35,000 bpd (barrels per day) to 585,000 bpd in November 2016—compared to October 2016. The rise in crude oil production from Libya could pressure crude oil (USO) (UCO) (PXI) (ERX) (USL) (RYE) prices. Production rose 6.4% month-over-month and 56% year-over-year.

Libya produced ~1.8 MMbpd (million barrels of oil per day) of crude in 2007. Civil war and militant attacks on the country’s oil infrastructure caused the fall in Libya’s crude oil production.

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Libya’s crude oil exports

On December 19, 2016, Libya’s biggest port, Es Sider, reopened after two years. It had been shut down due to militant attacks. Es Sider’s capacity before the militant attacks was at 350,000 bpd (barrels per day). Currently, it’s operating at much lower levels. The rise in exports from Libya could pressure oil prices.

Libya’s crude oil production estimates 

On December 2, 2016, Libya’s National Oil Corporation reported that Libya could increase crude oil production 50% in 2017. It expects production to hit 900,000 bpd by 2017. The expectation of a rise in Libya’s crude oil production could pressure crude oil prices in the oversupplied market. The fall in Libya’s crude oil production was one of the factors that kept global crude oil prices elevated until mid-2014.

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Libya, Nigeria, and Iran’s crude oil production 

Libya and Nigeria were exempt from a crude oil production cut at OPEC’s meeting on November 30, 2016. For more updates on OPEC’s meeting, read Part 1 of this series. A Reuters survey estimates that Nigeria’s crude oil production rose by 50,000 bpd to 1.7 MMbpd in November compared to October.

Iran was allowed to increase its crude oil production by 90,000 bpd. Rises in crude oil production from Iran, Libya, and Nigeria could extend the crude oil oversupply. For more information, read Iran, Nigeria, and Libya Could Undo OPEC’s Historic Deal.

Impact on oil prices, stocks, and ETFs   

Higher crude oil supply in 2017 could pressure crude oil prices. Lower crude oil prices could impact oil producers such as ExxonMobil (XOM), W&T Offshore (WTI), Triangle Petroleum (TPLM), Synergy Resources (SYRG), Denbury Resources (DNR), Devon Energy (DVN), and Laredo Petroleum (LPI).

Moves in crude oil prices could influence ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the Energy Select Sector SPDR ETF (XLE), the ProShares Ultra Oil & Gas (DIG), the iShares US Oil Equipment & Services (IEZ), the Direxion Daily Energy Bear 3X ETF (ERY), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the SPDR S&P Oil & Gas Equipment & Services ETF (XES).

In the last part of this series, we’ll take a look at some crude oil price forecasts.

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