Oil Markets: Libya’s oilfields resume production, but global prices remain high
Various factors such as domestic and global macroeconomic data, the trend in global stock markets, the progress of monsoon, the movement of the rupee against the dollar, and crude oil prices play a significant role in determining the direction of the stock exchanges.
In recent news, oil prices experienced a decline on Friday but managed to record a third consecutive weekly gain, which hasn’t been seen since April. The increase in prices can be attributed to supply disruptions in Africa and the expectation that easing inflation in the United States will drive up crude demand in the world’s largest economy.
Brent, considered the benchmark for a significant portion of global oil, concluded the week 1.83 percent lower at $79.87 per barrel. Similarly, West Texas Intermediate (WTI), which tracks US crude, experienced a decline of 1.91 percent, settling at $75.42 per barrel.
However, the previous day witnessed Brent closing 1.6 percent higher at $81.36 per barrel, while WTI rose by 1.5 percent to $76.89 per barrel.
A.K. Jain, the chairman of the Petroleum and Natural Gas Regulatory Board, said that, “India should establish storage facilities for natural gas to promote the use of cleaner fuel within the country. This move would also serve as a hedge against global price volatility. Jain emphasized the importance of having natural gas storage capabilities that enable suppliers to accumulate stocks during periods of low prices. This would not only ensure a stable supply but also cater to the rising demand from industries.”
Also the production at Libya’s Sharara and El Feel oilfields resumed on July 16 after protests that had shut them down for several days, can cool down the oil prices in future. The protests were over unpaid wages and demands for better working conditions.
The Sharara field is the largest oilfield in Libya, while El Feel is the second-largest. The two fields together produce around 800,000 barrels of oil per day, which is a significant amount of revenue for the country.
The protests began on July 11 at the Sharara field and spread to the El Feel field on July 12. The workers were demanding unpaid wages and better working conditions, including access to clean water and medical care.
The protests caused a significant drop in Libya’s oil production. The country’s oil output had fallen to around 1.2 million barrels per day, from around 1.6 million barrels per day before the protests.
However, it is unclear how long the production will continue. The protests could resume if the demands of the workers are not met.
By addressing these issues, the oil price can create a more stable for economic growth and prevent future disruptions in production.
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Updated: 16 Jul 2023, 10:47 PM IST
