The Organization for Petroleum Exporting Countries and its allies (OPEC+) are closely watching attempts to resume oil output in Libya and are assessing the situation, according to Reuters.
A restart in Libyan exports could mean further cuts for other OPEC members as Libya is exempt from cuts under the current OPEC deal. With the resumption of Libyan oil, there will be a further influx of oil into an already saturated market.
An OPEC said in a statement to Reuters: “At this stage, we should watch for some time. But the market is reacting much faster on bearish sentiment.”
As a possible reaction to the resumption of exports, oil prices fell to $42 a barrel on September 21. However, as of yet, the OPEC sources said time was needed to assess the situation.
Libya’s National Oil Corporation (NOC) lifted force majeure on what it deemed secure ports and facilities, and restart procedures are underway at some locations following a blockade beginning in January that cut production.
OPEC+, made a record cut in supply of 9.7 million barrels per day from May 1 to support prices as the coronavirus crisis knocked demand. OPEC+ tapered the cut to 7.7 million barrels per day (mmbbl/d) from August 1.