(Bloomberg) --
The blockade on Libyan oil exports imposed by one faction in the country’s civil war will be lifted, potentially adding large volumes of crude to a market weakened by the coronavirus pandemic.
General Khalifa Haftar said on television that he has decided to allow the reopening of Libya’s oil ports “as per conditions and guarantees that ensure a fair distribution of wealth and spare it being plundered or used in terrorism financing.” It’s unclear how much crude can return to the market, or how quickly, but the North African country was pumping about 1.1 million barrels a day prior to the blockade.
Crude erased gains, with Brent dropping 0.7% to $43 a barrel as of 12:42 p.m. in London.
Any additional supplies would be entering the market at an unfortunate time, just as the recovery from the historic slump triggered by the Covid-19 pandemic is faltering. Brent crude, the international benchmark, fell below $40 a barrel last week for the first time since June, prompting a robust response from OPEC+ at a meeting on Thursday.
There have been false dawns before in efforts to resolve the long-running conflict between forces loyal to Haftar, who control eastern Libya, and the government based in Tripoli. Parameters of the deal announced by Haftar on Friday were unclear. He had conditioned resuming production on a mechanism being in place to distribute revenue, officials said. The National Oil Corp., backed by the U.S. and United Nations, had proposed freezing revenue until that mechanism is decided, and also conditioned lifting the export shutdown on the withdrawal of Wagner, a Russian mercenary force, and other armed groups.
A spokesman for the NOC declined to comment.
©2020 Bloomberg L.P.
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