Libyan Production Set to Recover, but OPEC Waiting to Adjust Output
When Libya’s oil output slowed to a trickle several months go, OPEC’s Gulf members went far and beyond filling in the gaps, actually boosting production to its highest levels all years – around 30 million barrels per day in July. (image: electionsmeter.com)
Libyan rebels took control of Tripoli today, further solidifying beliefs that the country’s oil production will soon return to levels seen before the violent civil war began in February. However, OPEC’s Gulf members probably won’t reduce oil output for some time, since relying on Libya too early could be a mistake, Reuters reported.
Before political upheaval disrupted production, Libya pumped out more than 1.3 million barrels a day, nearly 2% of the world’s supply. Since that’s been out of commission, other Gulf members (mostly Saudi Arabia) have stepped in to make up the loss.
While strategists remain confident the Libyan rebels will successfully oust bizarre leader Moammar Gadhafi, restoring oil output and a more peaceful government, OPEC officials said there’s no reason to rush into anything.
“Let’s see when they completely come back with their output before the crisis. And then, OPEC will see whether it affects prices or stocks, and then it will take the right direction,” one Gulf delegate commented. “We can’t say now what OPEC will do. Are they going to take one month, three months, a year?”
In fact, the group likely won’t make a solid decision until their next meeting in December. The delegate noted any decision to slash output will depend on varying factors like oil prices and demand levels.
