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Oil set to end week lower on coronavirus resurgence fears

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Oil prices edged higher on Friday but were on track for their first weekly fall in seven as new U.S. coronavirus cases spiked, raising the prospect of a second wave hitting demand.

Brent LCOc1 was up 27 cents, or 0.7%, at $38.82 a barrel by 1204 GMT, having lost more than $1 earlier in the session.

After falling more than 5% on Friday, West Texas Intermediate CLc1 was up 19 cents, or 0.52% to $36.53 a barrel. Both contracts ended around 8% lower on Thursday.

The oil benchmarks are heading for weekly declines of more than 8%, their first after six weeks of gains which have lifted them off their April lows.

Coronavirus: 393 cases recorded in Libya

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Libya has recorded 15 more COVID-19 infections over the past 24 hours, bringing the total number of known cases in the country to 393.

The figure was reported by the Libyan National Center for Disease Control on its Facebook page, noting that five people who tested positive for the virus have died, 59 have recovered and the number of people still testing positive has risen from 314 to 329.

Lockdown measures are in place in many cities in southern Libya in an attempt to limit the spread of the virus but the lack of security in the country is having repercussions on public health.

Sabha receives medical aid

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The Ministry of Health of the Government of National Accord has sent medical aid to Sabha city in southern Libya.

The director of Medical Supplies Department is Sabha, Mohammed al-Shawi, said the aid included operating materials for the Coronavirus testing lab.

He added that other medical shipments will arrive during the coming days.

Oil closure losses exceeding $ 5 billion

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Libya’s National Oil Corporation (NOC) claimed oil cloure losses exceeded 5 billion US dollars as a result of the frequent blockades that have shocked the oil sector since 2011 until the present time, and the consequent technical, economic and social damages, whose consequences have become salient on various aspects of life in Libya.

“With more than 5 billion US Dollars, more than 900 modern schools can be established with facilities and science experiment LABS,” NOC stated.

NOC and Zallaf discuss plan for optimal development of Erawin field

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On Thursday, June 11, 2020, the National Oil Corporation (N)C” and “Zallaf Libya” Company for Exploration and Production of Oil and Gas held a meeting through Teams Video Conferencing Technology in the presence of Mr. Abulgasem Shengher, the NOC board of directors member for E&P and Dr. Khalifa Rajab Abdulsadek, Chairman of the Management Committee of ” Zallaf Libya”, as well as, Members of the company’s management committee, NOC, and Zallaf company Technical specialists.

During the meeting, the company proposed conducting a series of long-term tests for the field in order to optimize the field development plan. Both NOC and Zallaf agreed in principle on the long-term testing plan.

At the end of the meeting, it was decided that more meetings will be held for the NOC’s specialists and “Zallaf Company” for further clarification and strategy that guarantees the best results out this long-term testing plan.

Oil prices set for worst daily drop since April

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Oil prices slumped on Thursday, dragged down by another record build-up in U.S. crude inventories and the U.S. Federal Reserve’s projections that the world’s biggest economy would shrink 6.5% this year.

Brent crude futures fell 3.4%, or $1.42, to $40.31 a barrel by 06:00 GMT, erasing Wednesday’s gains. Earlier in the session, Brent was down as much as $1.53, or 3.7%.

U.S. West Texas Intermediate (WTI) crude dropped 4%, or $1.60, to $38 a barrel, after being down earlier as much as $1.69, or 4.3%.

US urges Libya ceasefire, protection of oil

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US Secretary of State Mike Pompeo on Wednesday backed calls for a ceasefire in Libya, urging the warring parties to preserve the country’s oil.

“Quick and in-good-faith negotiations are now required to implement a ceasefire and relaunch the UN-led intra-Libyan political talks,” Pompeo told reporters, shortly after European leaders also backed a truce.

“Putting Libya on the path to economic recovery means preserving Libyan oil facilities,” he added.

Should We Expect Oil-Well Reactivation in Libya?

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According to Al-Senussi Al-Haliq, deputy chairman of Libya’s Supreme Council of Tribes and Libyan Cities for Gas and Oil, the resumption of work on the field was illegal and should be closed again.

“The National Oil Corporation tried to persuade oil companies to resume operations in the field, but tribal representatives stopped its work again”, he said.

As to attempts to reactivate the field, he continued: “This is a matter that falls within the competence of the Libyan tribes, not the LNA, the GNA or any other force. Therefore, we will block any attempts to open the production – let alone by force.”

Commenting on how to cover domestic needs when fields are mothballed, Al-Haliq indicated that some small refineries are operating but only for the domestic market.

For his part, Mayor of the Municipality of Kufra, Muftah Abu Khalil, recalled that the deposits were mothballed at the request of the Libyan tribes and should be opened after the list of their demands is fulfilled, but that has not yet happened.

“The decision to re-open fields can only be made by representatives of the tribes that have closed them. Their list of demands has remained unfulfilled”, he said.

However, Libyan economist Suleiman al-Shahumi believes that the resumption of fields in south-western Libya, among which is El-Sharara, will not bring serious benefits at this time and can only exacerbate economic problems.

“The point is that only one-third of Libya’s oil reserves are produced here. It’s not that much. Given the fact that the hostilities have not ceased, political stability is not yet expected. The world oil market is in crisis. Under these circumstances, there may simply be no way to pay salaries to field workers, and the job will be at a loss. Therefore, the current state of affairs is not conducive to the reactivation of facilities”, he said.

Libya’s El Feel, Sharara oil fields shut again days after reopening

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Libya’s two key western oil fields — El Feel and Sharara — have been closed again shortly after reopening, showing the extent to which they remain hostage to armed groups as the country’s civil conflict continues to escalate.

State-owned National Oil Corporation said the 75,000 b/d El Feel field had been shut June 10 after an armed group occupied the field.

The recent stop and start events underscore the fragility of the country’s much anticipated return to export markets.

More disruptions likely
S&P Global Platts Analytics said recent events showed Libya’s potential restart of up to 400,000 b/d from southwestern fields faced many risks, and sporadic disruptions were likely to persist.

“Eastern general Khalifa Haftar could regroup with greater backing from the UAE, Egypt, and Russia, while Libyan production dynamics over the past few years indicate regional militias will likely continue to at least sporadically disrupt the fields and connected pipelines,” said Paul Sheldon, chief geopolitical adviser at Platts Analytics.

Hamish Kinnear, a MENA analyst at Verisk Maplecroft said the struggle and rapidly changing situation at the fields reflected the wider fluidity of the civil war.

Libya’s potential return to export markets with up to 400,000 b/d of mainly Es Sider and Sharara grade crudes comes as its partners in OPEC and their allies agreed on extending production cuts to cuts through July, to help bolster the market as it emerges from the depths of the COVID-19 pandemic.

Despite recent military gains by the GNA, the LNA still controls the eastern terminals of Es Sider, Ras Lanuf, Brega, Zueitina and Marsa el Hariga. That means some two-thirds of Libyan crude, or around 800,000 b/d, remains offline.