Libya´s production increase could mean trouble for OPEC
The oil cartel is most probably not happy with the latest announcements from North Africa.

OPEC turns 60 today, but the celebrations have been postponed amid the ongoing pandemic. The combination of the destruction of demand from COVID-19, a troubled global economy and volatile demand for energy are worrying about the recovery in oil prices. At the same time, OPEC members like Iraq, Iran, Venezuela and even Algeria and Nigeria are facing economic difficulties due to the much lower oil revenues. On the supply side, internal conflicts in Iraq and Venezuela, which have reduced exports, and US sanctions against Iran, which have severely curtailed the country's ability to export crude oil and oil products, have exonerated the cartel. No real change is expected in these countries in the foreseeable future, but for OPEC member Libya, things could change quickly. The North African oil producer has seen its exports slow as a result of the ongoing military conflict between the Tripoli-based GNA government backed by the United Nations and Turkey and the East Libyan power broker General Haftar, whose armed forces include the UAE, Russia and several other Arab and European countries have collapsed. Years of military confrontation have not only brought the Libyan oil and gas sector to a standstill, but also led to a Haftar-sponsored blockade of oil exports. OPEC will not be outspoken, but removing Libyan oil from the world market has made things a lot easier for the cartel. However, the export blockade could not last long if the US-supported sources are correct. As the US Embassy in Tripoli announced, Libya's General Haftar has committed to lifting the oil blockade by September 12th. The US embassy stated that "the US embassy is encouraged by an apparently sovereign Libyan agreement to enable the National Oil Corporation (NOC) to resume its vital and apolitical work". In an exchange of letters between Ambassador Norland and the Commander of the Libyan National Army (LNA), Haftar, and in recent discussions with a wide range of Libyan leaders, the Ambassador underscored the US confidence in the NOC and supported a financial model that provides a credible guarantee for it that "oil and gas revenues are transparently managed and preserved for the benefit of the Libyan people". The same press release said that "the LNA subsequently conveyed to the US government General Haftar's personal commitment to allow the full reopening of the energy sector by September 12th at the latest." The US and all parties involved seem to have agreed that security will be in place so that all Libyans can be confident that the proceeds will not be misused. The press release also mentioned that the reopening of the oil and gas sector is intended to enable progress towards a much-needed overhaul of safety precautions for the NOC facilities, including the complete withdrawal of foreign military personnel and equipment that is accessing oil without Libyan consent - and stop gas sites, as well as a Libyan agreement on the reform of the Petroleum Facilities Guard and the breaking of the raid by certain armed groups. This news seems very positive, but the deal doesn't necessarily mean that the babbling parties will actually respect it. Current assessments are not very optimistic considering the important role played by third party military groups in the conflict on both sides. Groups backed by Turkey, the Emirates and Russia may attempt to exploit the situation to gain control of strategic positions.





