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Libya’s crude oil export terminals are revisiting a two-week-old shutdown, raising concerns over crude supply.
Strikes at the Es Sider and Ras Lanuf export terminals have also prompted closures at other oilfields, creating some of the worst supply disruptions since the civil war in 2011. Reuters reported that a source at the Arabian Gulf Oil Company commented that output from the state oil subsidiary company has already inched below 60,000 barrels per day (bpd), down from 375,000 bpd before the disruption. Together, the Es Sider and Ras Lanuf export terminals have a combined export capacity of 600,000 bpd.
Chairman of the federation of oil workers, Mohammed El-Hattab, told the publication that they are hoping to restart exports in the short term.
On what was shaping up to be an uneventful day for oil, the Libyans’ protests did spark some price movements for Brent crude. After hitting a low of $107.43, Brent crude was up 75 cents, to $108.97, above its 200-day moving average and past the key technical figure of $108.16.
“We saw some reaction to concerns about supplies in Libya, which helped to give us some support in an otherwise quiet day,” said Phil Flynn, an analyst with Price Futures Group in Chicago, told Reuters.
Mexico open for business
On Monday, Mexican President Enrique Peña Nieto proposed that foreign firms take part in the state-run oil industry — a proposal that in the past has stoked protests from those who view the government’s hold on the oil industry as a measure of the country’s independence.
According to Peña Nieto, the intent of allowing foreign firms into Mexico’s oil industry is not to lose federal hold of the oil industry but rather to enable state-owned firms like Petróleos Mexicanos, or Pemex to partner and share profits with foreign firms, allowing for more private participation in electricity generation, and ultimately lowering prices. Peña Nieto believes these measures would help the country’s oil industry which has been suffering from lagging production for years.
“We require capital, technology and know-how so it’s necessary to associate ourselves with those who have it,” Energy Secretary Joaquín Coldwell said.
Naysayers of the proposal remain wary of sharing Mexico’s resource wealth with outsiders, however, PRI president César Camacho Quiroz explains that “It serves no purpose to say that natural resources belong to Mexicans if they stop benefiting them.”
Peña Nieto’s proposition will require a change to the Mexican constitution, but he believes that should it go through, MExico could see a rise in production to 3.5 million bpd by 2025.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.