Due to the disruptions of crude operations in Libya oil prices have only continued to climb and stocks drifted lower. In a statement made by the Italian company Eni, natural gas supplies from Libya via the Greenstream pipeline have been suspended, but fortunately, still able to meet customer demand.
Fighting in Libya raises the prospect of turmoil spreading into the Middle East and North Africa and has weighed down global financial markets. Now, fighting has reached the northwest of the Libyan country with only Qaddafi having a tight grip on the capital, Tripoli.
Most of the large areas of the east, where much of Libya’s oil producing and port operations take place, have lost political control. This has helped to drive oil prices to a two year high where it is noted by Barclays Capital that an estimated 1 million barrels a day of production have been shut in ( more than half the country’s total).
Many oil companies have stopped their production in Libya. The British giant, BP, stated they were even evacuating workers. Similar to BP, ENI, Repsol of Spain, Total of France, Statoil of Norway, and BASF, the German chemical and energy company have stopped production and moved workers out of the country.
Saudi Arabia has made many efforts to calm down the market. They have said that OPEC is ready to compensate for any shortfalls due to unrest in Libya. The country produces about 2% of global daily output. Tuesday, Libya declared “force majeure on all oil-product exports, meaning it could miss contractual obligations because of circumstances beyond its control.” This is not a good sign and the rising crude prices definitely stunt the progress toward a global economic recovery…
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