Oil in Global Economy Series: Oil traders ignore crisis in Libya as OPEC meeting approaches

Oil traders largely ignore the latest happenings in Libya, which saw oil tanks burning and storage depletion and destruction, as the focus is largely on this week’s OPEC meeting, which will be taking place on Friday, where both OPEC and non-OPEC producers would be meeting to discuss the production cut agreement that aimed at reducing oil supplies by 1.76 million barrels per day and came into force since January 2017 and expires at the end of 2018. It is expected that producers would ease the production cap by a million barrels per day.

The crisis in Libya began last week when forces loyal to the Libyan strongman Khalifa Haftar said that they are advancing rapidly on the eastern city of Derna, which is an opposition stronghold and the only eastern city out of Haftar’s control. However, these advancing forces have been hit by immensely damaging suicide attacks. The clash turned violent since last Thursday and so far, two of the five Libyan tanks have been set on fire and destroyed. Since Thursday, clashes have been ongoing between forces led by the former Head of the Petroleum Facilities Guard Ibrahim Jadhran and the forces of Khalifa Haftar's self-styled army, leading to the former's control of Sidra and Ras Lanuf oil terminals. The LNA will likely recapture al Sidra and Ras Lanuf rapidly, relying on its air power, larger support base, and likely Egyptian support if needed, however, risks to the oil supplies from militant attacks remain.

Libya's National Oil Corporation NOC confirmed earlier the loss of Tanks No.2 and 12 in Ras Lanuf oil terminal and the drop in storage capacity from 950,000 to 550,000 oil barrels.

WTI crude is currently trading at $65 per barrel and Brent at $74.6 per barrel.