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Oil fell towards $110 a barrel on Thursday after Libya declared “the end of the oil crisis” that has slowed the country’s exports to a trickle.
Acting prime minister Abdullah al-Thinni confirmed reports the government had reached a deal with the rebels who had blockaded two key oil terminals.
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“We have successfully reached an agreement to solve the oil crisis. We have received today Ras Lanuf and Es Sider oil ports thankfully without the use of force,” Thinni told reporters at Ras Lanuf terminal in eastern Libya. “I officially declare this is the end of the oil crisis.”
The news provided relief to oil markets rattled by fears of disruption in Iraq. Ice August Brent fell 0.6 per cent to $110.61 a barrel in morning trading, extending the previous session’s three-week lows.
Libya’s oil industry produced about 1.4m barrels a day before protests, strikes and blockades reduced output to a low of 150,000 barrels a day.
The deal presents a major breakthrough for the north African state whose coffers have been hit hard by oil revenue losses. While it is hoped crude oil export capacity, which currently stands at about 315,000 b/d, will rise to some 500,000 b/d it is still a long way off returning to full pre-crisis levels.
“It will take a bit of time to restart the fields and the pipelines but it is nonetheless a major change for the European supply picture,” said Olivier Jakob at Petromatrix.
“With the reopening of all ports in the east of Libya, the protesters at the Sharara field in the west are losing their leverage and we therefore have to increase the probability of Libya returning to full capacity.”
