(Bloomberg) -- Libya's biggest oil field was said to stop producing, leading to a 20 percent decline in crude output from the country with Africa's largest reserves.
The OPEC nation's output dropped to 560,000 barrels a day, according to a person familiar with the matter who isn't authorized to speak to the media and asked not to be identified. The North African country was pumping 700,000 barrels a day, Mustafa Sanalla, chairman of state-run National Oil Corp., said on March 22. Oil prices rose as much as 1.4 percent.
The pipeline carrying crude from Sharara, Libya's biggest field, to the Zawiya refinery stopped operating, the person said. It wasn't clear why the pipeline was shut. The NOC didn't respond to calls seeking comment.
Clashes among rival armed groups in early March led to the closing of two of the nation's biggest oil export terminals, forcing a number of other fields to halt production. The ports have since reopened. Libya pumped as much as 1.6 million barrels a day before a 2011 uprising led to the ouster of former leader Moammar Qaddafi and a breakdown in central authority that stunted oil production. Libya is one of the smallest members of the Organization of Petroleum Exporting Countries.
“The important question for the market will be whether this turns into a lengthy disruption or not,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by email. “The political and security situation remains deeply unstable and so I am not surprised to see Libyan output continue to fluctuate on these kinds of issues.”
Brent crude, a global benchmark, climbed to the highest in a week, rising 71 cents to $51.46 a barrel, the most since March 21, and was trading at $51.30 a barrel by 5:18 p.m. in Dubai.
Sharara, in western Libya, had been producing 221,000 barrels a day, the NOC said March 21. Spain's Repsol SA is an operator of Sharara. The Eni SpA-developed Wafa oil field, farther to the west near the Algerian border, is also shut, the person said. Wafa has capacity to produce about 35,000 barrels a day.
--With assistance from Grant Smith and Hatem Mohareb
To contact the reporters on this story: Saleh Sarrar in Dubai at ssarar@bloomberg.net, Salma El Wardany in Cairo at selwardany@bloomberg.net.
To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Claudia Carpenter, Bruce Stanley
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
