On Monday, some sources from the Organization of the Petroleum Exporting Countries (OPEC) said that the group is monitoring the Libyan oil output restart very closely, but added that the assessments to a concrete OPEC strategy would need time.
Previously on Saturday, Libya’s National Oil Corporation (NOC) had lifted force majeure on some ports and facilities. Production restarts are underway at some locations.
Under the OPEC and allies (OPEC+) oil production cut pact, Libya is exempted and now a restart in the country’s supply could force other producers to make additional cuts in productions to support prices.
The prospect of Libyan oil comes back to the market after being shut since January has already caused market nervousness as on Monday, oil prices slumped towards USD42/barrel.
“At this stage, we should watch for some time,” one of the OPEC sources said. “But the market is reacting much faster on bearish sentiment.”
On the other hand, another OPEC source opined that the coming back of Libyan oil was less of a concern compared to the prospect of slumping demand on the back of the new round of coronavirus lockdowns.
OPEC+ is now cutting oil output by 7.7 million bpd, starting on August 1 to support oil prices amid the coronavirus pandemic knocking demand. Previously starting May, the cut was at a record of 9.7 million bpd.
