Libyan Oil Output Choked Off as Two More Ports Are Out of Action

(Bloomberg) -- Libya's National Oil Corp. declared force majeure on another two oil ports, removing thousands more barrels from the market just as global supply concerns put pressure on OPEC to ramp up production.

Oil loadings at the Zueitina and Hariga export terminals in eastern Libya have stopped, the Tripoli-based NOC said Monday. The halt comes just a week after the Es Sider and Ras Lanuf ports were shut down, and coincides with U.S. calls on the Organization of Petroleum Exporting Countries to pump more and cool prices.

While Libya holds Africa's largest oil reserves, years of conflict among armed groups competing for influence over its energy riches have hobbled production and exports. The latest port halts, combined with the shutdown of Es Sider and Ras Lanuf, will cut the country's oil output by 850,000 barrels a day at a cost of about $67.4 million a day, according to the NOC.

“Two legitimate allocations were blocked from loading at Hariga and Zueitina this weekend,” NOC Chairman Mustafa Sanalla said in a statement declaring force majeure, a legal clause allowing the company to miss deliveries. “The storage tanks are full and production will now go offline.”

Last week, forces loyal to Khalifa Haftar, a commander in the politically divided nation's east, handed over control of ports he recaptured from a rival militia to a self-declared NOC authority in the eastern city of Benghazi. The U.S., Britain, France and Italy expressed concern about the transfer to “an entity other than the legitimate National Oil Corporation,” in a joint statement.

Sanalla called on the army to return the facilities to the Tripoli-based NOC, but on Monday said the army's General Command had “declined to rescind its order that no vessel be allowed to port to receive allocated shipments.”

To contact the reporter on this story: Salma El Wardany in Cairo at selwardany@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Amanda Jordan, Helen Robertson

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