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Libya shuts down its largest production hub, sending oil prices soaring

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Nonhlanhla P Dube
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Oil prices are expected to rise further as Libya shuts down its largest oil field in response to protests against Libyan Prime Minister Abdul Hamid Dbeibah.

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Brent crude rose 2.5 percent to $114.55 (R1,691.05) per barrel, its highest level since March, while West Texas Intermediate rose 2.3 percent to $109.44. (R1,615.84).

Outages have added to ongoing supply concerns about Russia, and Libya’s National Oil Corp (NOC) warned Monday of a “painful wave of closures” across its facilities. Following the entry of protestors into the Al-Fil field, the NOC declared a “force majeure” and halted production.

“With global supplies now so tight, even the smallest disruption is likely to have a disproportionate impact on prices,” OANDA analyst Jeffrey Halley told Reuters.

The Al-Fil field is managed by NOC in collaboration with the Italian energy company ENI, and the production hub is responsible for approximately 70,000 barrels of oil per day. In March, the field was also temporarily closed due to an armed group entering the area.

Protesters said they would halt production “until a government-appointed by parliament takes office in the capital,” according to Libya’s state news agency.

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The field closure comes at a time when global energy markets are dealing with shaky geopolitics, with Russia threatening to cut off supply to “unfriendly” nations and the US and its allies considering a ban on Russian crude imports in the midst of the Ukraine war.

Russian oil has continued to be shipped in April, though cargoes are now travelling much greater distances to find buyers. It has been said that more shipments sent to Asia and the Mediterranean.

So far, the European Union, which is heavily reliant on Russian oil, has moved to ban Russian coal imports but has refrained from outright banning oil and gas. However, EU governments announced last week that the bloc was considering a crude ban proposal.

Meanwhile, Ukraine’s government has urged the world’s top energy traders to stop dealing with Russian crude entirely.

“The fact is that traders are trading, and they are assisting Russia in receiving this blood money,” said President Volodymyr Zelenskyy’s adviser to the Financial Times.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube