Consumers may soon see some relief at the pump as a new deal in Libya has been reached that should increase the global supply. On Sunday, Libyan authorities and a rebel group reached a deal to open two of the four blockaded terminals. Though the two terminals are the smallest of the four in the region, their “immediate” opening will improve Libya’s oil output quickly.
As a result, oil prices slipped below $101 on Monday. For most of the past month, the price of crude has hovered around $100.
The deal in Libya could increase crude output by 200,000 barrels per day but experts believe that the actual increase in exports will be around 70,000 b/d. Production numbers are currently at just 150,000 b/d, far below the post-2011 high of 1.4 million b/d. That number could jump significantly in the future, especially if negotiations for the two larger terminals go smoothly.
“This means that Libyan crude exports could increase by around 200,000 barrels a day in the next few days and a further 550,000 barrels a day early May if all goes according to plan,” said analysts from JBC Energy in a report.
But there is some debate about whether or not the opening of the two terminals will have much impact on the global landscape.
“The volumes of crude involved are limited, particularly given domestic demand. For context, the increase in exports will be smaller than if the offline 340,000 b/d el- Sharara field in the west restarted,” said Richard Mallinson, an analyst at Energy Aspects.
An unfortunate consequence of the increased capacity to produce and ship oil is the fact that it contributes to pollution and excessive waste, particularly in the United States. Though the U.S. holds just 4.5% of the world’s population, nearly a third of the planet’s waste is generated by Americans. So the fact that more oil might soon be available and prices could drop doesn’t mean that consumers and legislators alike should abandon green tech or stop investing in alternative energies.
The agreement with the rebels is a good sign, but is hardly the key to consistently-lowered oil prices in the future.
“The supply of oil from Libya will remain severely restricted for the foreseeable future, said Commerzbank analysts.
Whether they are right or not may be largely dependent upon stability and consistency in the region.