A port in eastern Libya is once more the focus of oil markets, three years after it was the scene of a battle in the overthrow of Muammar Qaddafi.
The Zueitina oil terminal, 550 miles (885 kilometers) east of the capital Tripoli, is due to load its first tanker today since being seized in July by separatists. The restart matters because it’s a condition for the return of two bigger rebel-held export terminals to government control, according to Danske Bank A/S. Should all three become operational, crude prices would drop about 5 percent, the bank estimates.
Oil output in Libya slumped about 80 percent since the start of the uprising against Qaddafi in 2011. Supply from what is now OPEC’s smallest producer influences the price of Brent,Europe’s benchmark crude, relative to West Texas Intermediate, its U.S. equivalent. The world’s most-traded oil spread widened to as much as $23 a barrel last year, from about $3 at the end of 2010. It has since narrowed to $8 as the central government reached peace deals with the rebels.
“Developments in Zueitina are a good litmus test for how swiftly the bigger ports can resume,” Miswin Mahesh, an oil analyst at Barclays Plc in London, said April 30. “The reopening of these ports is crucial and negotiations around this are expected to take place once there is good faith achieved between both parties.”
An oil tanker will collect a 600,000 barrel cargo at Zueitina today for shipment to Europe, Mohamed Elharari, a spokesman at state-run National Oil Corp., said by phone from Tripoli yesterday. The tanker Ottoman Tenacity was due to arrive, according to ship-tracking data compiled by Bloomberg.