Oil prices climbed on Tuesday (April 20) reaching $68 a barrel- hitting highest in a month-
amid lower output from Libya. The North African country’s National Oil Corporation (NOC) halted exports from Marsa el-Hariga terminal.
The force majeure on crude exports was declared on Monday (April 19) due to a budget dispute with the Central Bank of Libya (CBL), according to the NOC, leading to a drop in Libya’s output to bellow 1 million barrels a day.
“The announcement comes as a result of the Central Bank of Libya’s refusal to liquidate the oil sector budget for long months, which led to an exacerbation of the indebtedness of some companies” the Tripoli-based state-owned company said in its statement.
Daily lost income “may exceed 118 million dinars ($26 million)”, the NOC added.
NOC subsidiary Arabian Gulf Oil Co. (AGOCO), which runs the eastern port of Hariga, said on Sunday (April 18) it had halted output at some of its fields due to the government’s failure to send federal funds since September for operations. Hariga was expected to load about 180,000 barrels per day (bpd) in April, on board six tankers, according to a loading schedule, as per Reuters.
The NOC also announced that the oil sector “is in trouble more than ever, especially the national companies” and expects “that this painful reality may extend to the rest of the companies.”
The distribution of oil revenues, the lifeblood of Libya’s economy, and the budget allocations for the country’s oil sector have been a major source of contention in recent months.
The country’s interim Government of National Unity, which took over last month, and replaces both the Tripoli-based Government of National Accord and the parallel cabinet headquartered in Eastern Libya’s Tobrouk, that have been at war for the past 6 years- is still waiting for its 2021 budget to be approved by the House of Representatives.
The new cabinet, headed by Abdelhamid Dbeibah, is also tasked with implementing a UN-brokered political road map leading to December 24 general elections.
Libya’s production recovery has gathered pace in the past few months. In March, Libyan oil output hit 1.28 million bpd, the OPEC-member country told the cartel, an eight-year high. But the budget crisis starts to impact production recovery.
The NOC also requested the Office of the Attorney General officially “to hold accountable all those obstructing the company’s operations, directly or indirectly, and to take the necessary legal actions against all who attempts to jeopardize the capabilities of the country and damage Libya’s only source of income.”
Brent crude oil has recovered from historic lows hit last year, helped by some demand recovery and huge output cuts by OPEC+.