And in an odd but very profitable move, they're only putting a little bit on the market at a time. By Steve LeVine
Oil prices declined again today as Libya said it is poised to resume crude exports after a deal struck last week between a local rebels and Tripoli. The country has millions of barrels cooped up in storage awaiting shipment, but to prevent a freefall of prices, Libya will only let out the oil gingerly.
Libyan officials give widely varying estimates of how much oil is stored in Es Sider and Ras Lanuf, the two ports from which the oil will be shipped. Some officials say it is 3 to 4 million barrels (paywall), while others put the number at around 7.5 million, and still others estimate as much as 10 million (paywall).
Whatever the case, there is a lot of oil—enough to trigger a serious price collapse if traders see signs of a fast release. That’s why it will be released slowly, said a spokesman for the state-owned National Oil Company, Mohamed el-Harari. Already, global oil prices have dropped about $5 a barrel on the news of an imminent resumption in Libyan oil, to $110.64 today for internationally traded Brent crude—and petro-states (including Libya) would like to keep the price from dropping further.
Normally the two ports ship 560,000 barrels a day, about 40% of the country’s 1.3 million barrels a day of export capacity. Harari did not say when the shipments would resume. In all, some 3.5 million barrels a day of global oil capacity is off the market because of local politics in places such as Libya, and quite a bit of it is about to come back on line.