Gadhafi leaves Libyan oil at a crossroads
Ousted leader Moammar Gadhafi sat on a lot of oil. That, plus his often bizarre political antics and a legacy of state-sponsored terrorism, gave him a far higher profile than any tin-pot dictator deserves.
Now he’s gone. Read about Gadhafi's death.
What’s not gone is Libya’s oil. The nation still sits on about 41 billion barrels of oil, ranking its reserves first in Africa and ninth in the world.
Most of it is high-quality crude in close proximity to Europe. It is hands-down the one asset that put Libya on the modern world map.
Libya was pumping about 1.6 million barrels of oil a day before the March revolt shut down its exports. Production has gradually ramped up as the fighting died down and workers could be safely sent in to repair damaged or neglected facilities. Meanwhile, Libya’s National Transitional Council has assured the industry that they’ll honor existing production licenses and delivery contracts. At least for now.
So what’s this mean for the oil market? Since 1.6 million barrels per day is less than 2% of global demand, it’s not likely to have a huge impact on oil prices. Except in Europe. That’s because about 85% of Libya’s oil goes to European refiners. Restoring Libyan oil exports should eventually shrink the price spread between North Sea Brent Blend, Europe’s benchmark crude, and West Texas Intermediate, the U.S. benchmark.
That’s the likely short-term impact. But Gadhafi’s final exit raises much bigger long-term questions. What kind of government will Libya put in place? Will the country come under the sway of fundamentalist Muslim leaders or seek a more secular government? And will it adopt a less contentious relationship with Saudi Arabia and its other fellow OPEC members?
At this point, no one knows. Perhaps least of all the Libyans themselves, who face the daunting task of forming a single government in a nation rife with tribal rivalries and divergent ideologies.
In this volatile mix, there’s a strong possibility oil could emerge as Libya’s common denominator. Drafting a cohesive energy policy is essential to ensuring the nation’s future. But it could also divide. Oil has a long history of generating enormous wealth while sowing extreme discontent. Gadhafi’s tight-fisted control of Libya’s petro-dollars was a key reason he held power for so long. It’s also a key reason he lost it.
Gadhafi leaves Libyan oil at a crossroads - MarketWatch First Take - MarketWatch
Oil prices fall after Gadhafi's death
The price of oil is falling after the death of Libyan dictator Moammar Gadhafi, although it should take months for Libya's oil industry to recover and for the full impact to be felt on world markets.
Oil fell 33 cents to $85.28 per barrel in New York on Thursday. At the pump, the price of gasoline was flat at about $3.47 a gallon.
Before the Libyan civil war, Libya had provided the world's markets will 1.5 million barrels of oil a day. When Libya stopped exporting that oil, it helped push the price of oil to $114 a barrel earlier this year.
Oil prices fall after Gadhafi's death - BusinessWeek
Ousted leader Moammar Gadhafi sat on a lot of oil. That, plus his often bizarre political antics and a legacy of state-sponsored terrorism, gave him a far higher profile than any tin-pot dictator deserves.
Now he’s gone. Read about Gadhafi's death.
What’s not gone is Libya’s oil. The nation still sits on about 41 billion barrels of oil, ranking its reserves first in Africa and ninth in the world.
Most of it is high-quality crude in close proximity to Europe. It is hands-down the one asset that put Libya on the modern world map.
Libya was pumping about 1.6 million barrels of oil a day before the March revolt shut down its exports. Production has gradually ramped up as the fighting died down and workers could be safely sent in to repair damaged or neglected facilities. Meanwhile, Libya’s National Transitional Council has assured the industry that they’ll honor existing production licenses and delivery contracts. At least for now.
So what’s this mean for the oil market? Since 1.6 million barrels per day is less than 2% of global demand, it’s not likely to have a huge impact on oil prices. Except in Europe. That’s because about 85% of Libya’s oil goes to European refiners. Restoring Libyan oil exports should eventually shrink the price spread between North Sea Brent Blend, Europe’s benchmark crude, and West Texas Intermediate, the U.S. benchmark.
That’s the likely short-term impact. But Gadhafi’s final exit raises much bigger long-term questions. What kind of government will Libya put in place? Will the country come under the sway of fundamentalist Muslim leaders or seek a more secular government? And will it adopt a less contentious relationship with Saudi Arabia and its other fellow OPEC members?
At this point, no one knows. Perhaps least of all the Libyans themselves, who face the daunting task of forming a single government in a nation rife with tribal rivalries and divergent ideologies.
In this volatile mix, there’s a strong possibility oil could emerge as Libya’s common denominator. Drafting a cohesive energy policy is essential to ensuring the nation’s future. But it could also divide. Oil has a long history of generating enormous wealth while sowing extreme discontent. Gadhafi’s tight-fisted control of Libya’s petro-dollars was a key reason he held power for so long. It’s also a key reason he lost it.
Gadhafi leaves Libyan oil at a crossroads - MarketWatch First Take - MarketWatch
Oil prices fall after Gadhafi's death
The price of oil is falling after the death of Libyan dictator Moammar Gadhafi, although it should take months for Libya's oil industry to recover and for the full impact to be felt on world markets.
Oil fell 33 cents to $85.28 per barrel in New York on Thursday. At the pump, the price of gasoline was flat at about $3.47 a gallon.
Before the Libyan civil war, Libya had provided the world's markets will 1.5 million barrels of oil a day. When Libya stopped exporting that oil, it helped push the price of oil to $114 a barrel earlier this year.
Oil prices fall after Gadhafi's death - BusinessWeek
