Oil Prices Ease as African Union Delegation Arrives in Libya

Strategic Insights -

An African Union delegation arrived in Libya to negotiate a ceasefire, leading to a decrease in oil prices. Traders remain cautious that the country's oil exports may not resume soon, despite the peace plan being accepted by Tripoli. The possibility of an end to hostilities in Libya has spurred a pull-back in oil prices, with light, sweet crude for May delivery falling 57 cents to $112.22 a barrel. However, few market participants expect a swift return of Libya's oil exports, and the country's exports may take years to resume.

Key Takeaways:

  • Oil prices eased on Monday as an African Union delegation arrived in Libya to negotiate a ceasefire, with light, sweet crude for May delivery falling 57 cents to $112.22 a barrel.
  • The delegation said Tripoli had accepted a peace plan, but a rebel leader stated that the opposition would not accept a ceasefire unless the people are free to demonstrate in Tripoli.
  • Libya's oil exports are roughly 1.3 million barrels a day, with many market participants expecting a slow return to production due to the ongoing conflict.
  • Few market participants expect a swift return of Libya's oil exports, with an economist with BP PLC stating it could take years for the war-torn country to resume significant exports.
  • Unrest in oil producing countries has been a critical factor behind the 23% climb in Nymex oil futures prices this year.
  • Nigeria is also closely watched, with traders fearing disruptions to crude production during the country's national elections.

Statistics:

  • Oil futures prices fell 57 cents to $112.22 a barrel on Monday.
  • Libya's oil exports are roughly 1.3 million barrels a day.
  • Nigeria produces about 2.2 million barrels a day of high-quality crude.
  • Nymex oil futures prices have climbed 23% this year.
  • The African Union delegation's arrival in Libya led to a brief pull-back in oil prices.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dan Strumpf, Dow Jones Newswires
  • Stephen Bell, Dow Jones Newswires
  • Carl Larry, head of Oil Outlooks & Opinions
  • Christof Ruhl, economist with BP PLC
  • Swedish bank SEB energy analysts