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Libya’s oil recovery has taken markets by surprise, Bloomberg says

Bloomberg said that it is possible for Libya’s oil to make a comeback despite doubts of continuity, adding that Libya’s oil industry, which has been trampled by civil war and chaos, is now roaring back.

Bloomberg added Friday in an analysis article that Libyan crude output has surged to nearly 1.25 million barrels a day from almost a dead start in September, thanks to a tentative peace between rival military forces.

“The speed of the recovery took oil markets by surprise. It’s also causing anxiety for the Organization of Petroleum Exporting Countries and allies such as Russia as they restrict global output to prop up crude prices”. The American news agency said.

It added that Libya is exempt from the cuts and currently supplies more oil than several of its OPEC peers, yet OPEC+ alliance is sure to weigh the impact of Libyan oil when it meets next week to assess its strategy as the coronavirus ravages fuel demand in much of the world.

However, Bloomberg said that the big unknown about Libya’s production — for traders, analysts and oil minsters alike — is whether it can be sustained or even increased to pre-conflict levels of around 1.6 million barrels a day. 

“NOC Chairman Mustafa Sanalla said last month that the country targets pumping 1.6 million barrels a day by the end of 2021. The company has ambitions of eventually supplying more than 2 million barrels daily, an NOC official said to Bloomberg on Thursday, asking not to be identified because the matter isn’t public.” Bloomberg reported.

“The boost in output over the past two months may have been the easy part. To produce still more crude, the country will need buckets of cash to fix and upgrade its energy infrastructure. That in turn will require a lasting peace and political settlement.” Bloomberg explained, adding that to achieve that, the NOC will need more money from oil exports as well as investment from foreign energy partners who pulled out amid the fighting.

Bloomberg explained that institutional infighting poses another risk for Libya’s oil production, saying that in an unprecedented step, the NOC this week said it won’t deposit money from crude sales with the central bank, keeping it instead with another lender until rival sides in the country’s civil war can reach a long-term political agreement.

The NOC accused the central bank of issuing inaccurate data about oil revenue; a seemingly bureaucratic spat that hints at a deeper dispute that could complicate efforts to move past the war and threaten Libya’s oil recovery.

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