Will oil prices fall as Gaddafi regime reaches endgame?

22nd August 2011

The Financial Times (paywall) was last reporting how rebel forces had advanced deep into the capital, capturing his son, Seif al-Islam. 

"As jubilant crowds filled Green Square at the heart of Tripoli on Sunday night, the rebels said they would grant safe passage to Col Gaddafi and his family if they agreed to leave the country, claiming he had called for talks with the leader of the National Transitional Council amid reports that his presidential guard had surrendered to rebel forces."

The Guardian's Market Forces blog reports how expectations that exports from the OPEC member could resume soon have already sent the price of Brent crude down $3 to $105.67 a barrel on Monday morning, a fall of 2.6%.

US crude was down 76 cents at $81.50, a drop of 0.9%. The blog quotes analysts saying they believe Libya could be pumping up to 1m barrels a day again within months.

Before the war halted exports, Libya was pumping some 1.6m barrels a day, accounting for nearly 2% of global supply. Most of it flowed to European refiners, and tightening supply after Libyan exports stopped in the spring drove Brent crude to a two-year high of $127.02 in April.

Jonathan Barratt, managing director at Commodity Broking Services in Sydney told Reuters: "You willl see a relaxation in the supply of crude to the region as a result of what is happening in Libya."

On The Guardian comment boards one reader linked events in Libya with the riots in the UK earlier this month.

FrankPoster writes: "If we did not know already, yet another article proving how morally bankrupt we are. If we break international laws to invade and take the oil of a nation, if we break financial regulations to allow massive manipulation of the stock and money markets, then lots not wonder too much when a bunch of youths lead by "our" examples and trash a city centre and steal items.

"Many will say it is unconnected, and indeed the levers are complex, but this moral bankruptcy is an awfully large lever in my book. A wrong is wrong. It is black or white, there is no room for shades of gray."


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