Posts tagged “Libya”
More than a year following the ouster of Muammar Gaddafi as leader of Libya, oil production has returned to pre-civil war levels, but a variety of factors are combining to keep investors away from the OPEC nation, a fact that is only contributing to the continued unrest of the country’s people.
“There is no rational reason for high oil prices,” writes Ali Naimi, Saudi Arabian Minister of Petroleum and Mineral Resources, in today’s Financial Times. Well, I can think of one– if oil prices were lower, the world would want to consume more than is currently being produced.
The graph below plots total world oil production over the last decade. After growing rapidly in earlier years, production hit a bumpy plateau. In November 2007, just before the U.S. recession began, the world was producing 84.9 million barrels each day, a little less than was produced in the spring of 2005. Although production stagnated, the demand curve continued to shift out, with world GDP growing 5.3% in 2006 and another 5.4% in 2007.
As hostilities in Libya wind down, one thing is clear: A number of nations will jockey for access to Libya’s oil. It happened in Iraq, where ironically the U.S. was shut out as Russia, China, and France won bids to develop Iraq’s fields. The new government in Iraq demanded terms very much in Iraq’s favor — and got them. U.S. companies simply weren’t willing to pay what China paid for access to Iraq’s oil. I would expect Libya to have taken notes from what companies were willing to concede in Iraq and demand similar terms. And regardless of who ends up there, one of the countries will certainly be China (they also had a big presence in the old regime)…. Continue»
I am between flights and have been traveling for a few days, but wanted to get off a quickie on current oil prices. In hindsight, perhaps I was not aggressive enough with my predictions for 2011. My predictions covered two themes: Next generation biofuel producers whose business models would begin to collide with reality, and oil prices that would head back over $100 per barrel. Less than two months into 2011, there has been big news on both fronts. We have already spent a few weeks discussing the Range Fuels debacle, and now oil prices have once again breached $100. In fact, many markers such as Brent crude have been above $100 for several weeks, and they recently approached $120… Continue»
Peak demand or not, oil prices show no signs of subsiding: Oil Surges Above $140 to Record as Libya Warns of Output Cut June 26 (Bloomberg) — Crude oil jumped above $140 a barrel to a record as Libya threatened to cut output, OPEC’s president said prices may reach $170 by the summer and the dollar weakened. Libya may curb output because of a U.S. law that allows terror victims to seize assets of foreign governments as compensation. OPEC President Chakib Khelil said oil may surge on a European interest rate rise, France 24 reported. Oil, gold and copper climbed today as the dollar dropped because the Federal Reserve gave no signal of higher interest rates yesterday. Crude oil for… Continue»