Libya’s Crude Oil Production Is Helping Crude Oil Bears

Libya’s crude oil production

On June 19, 2017, the National Oil Corporation of Libya reported that the country’s crude oil production rose by ~50,000 bpd (barrels per day) to 885,000 bpd in June 2017. Production rose due to the restart of crude oil production at the Sirte Basin in Libya. Germany’s Wintershall and Libya’s National Oil Corporation agreed to restart production at Wintershall’s NC 96 and NC 97 concessions in the Sirte Basin.

According to the agreement, National Oil Corporation and Wintershall could produce 160,000 bpd of crude oil in the oilfield at the Sirte Basin. Libya’s crude oil production is at the highest level in three years. The rise in Libya’s production is bearish for crude oil (IEZ) (XLE) (BNO) prices. Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Continental Resources (CLR), Warren Resources (WRES), and PDC Energy (PDCE).

Libya’s Crude Oil Production Is Helping Crude Oil Bears

Libya and OPEC’s production cut deal 

Libya is an OPEC member. Libya was exempt from the OPEC’s production cut deal on May 25, 2017. As a result, Libya is ramping up production. 

Libya’s crude oil production estimates 

Libya’s production is expected to hit 900,000 bpd by the end of June 2017. The National Oil Corporation expects that Libya’s crude oil production could hit 1 MMbpd by the end of July 2017. The restart of key oilfields in Libya led to the rise in crude oil production. However, political uncertainty and militant attacks on oil infrastructure could be a concern for oil producers. Any rise in crude oil production from Libya could weigh on oil prices.

In the next part, we’ll discuss some crude oil price forecasts.