The Rebels entered tonight to Tripoli, Libya the last major hold of Gaddafi. They have conquered most of Tripoli and currently there are fights near Gaddafi’s palace. According to the reports Gaddafi is still in Libya and didn’t exist to allied neighboring countries.
Currently, the crude oil markets have reacted to this news as Brent oil price sharply declines, WTI spot oil is also being traded down.
Libya has the largest proven oil reserves in Africa with over 46.4 billion oil barrels as of 2011.
During the past several months, since February 2011, when the Libyan war has commenced the crude oil production of Libya has fallen dramatically from 1.6 million bbl/d in 2010 to next to nothing at 53 thousand bbl/d. This news of the Libyan turmoil was probably one of the major catalysts not only to drive crude oil prices to over $100/bbl for WTI and $110/bbl for Brent oil, but also to further widen the spread between Brent oil and WTI spot oil. Last week, the spread between Brent oil and WTI oil reached an all time high of $27.27/bbl.
The current news from Libya might bring down the premium of Brent oil over WTI, but there are still many uncertainties in Libya to be resolved before its oil production will resume normal capacity, including answering questions such as who will lead the Libyan nation. The current falls in crude oil prices are only speculation based.
One of the prime countries that suffered from this Libyan turmoil due to the halt in Libya’s oil production was Italy; it used to import nearly 28% of Libyan oil during 2010 – the largest share among all other countries. Italy may step up now that Gaddafi’s regime has ended and collaborate with the rebels leaders.
Currently, the Nymex crude oil price, short term futures (September 2011 delivery) is traded at 81.44 USD / barrel, a 0.82 USD/b decrease or 1%, as of 07:25*.
The Dated Brent oil price, short term futures (September 2011 delivery) is traded at 105.82 USD / barrel, a 3.71 USD/b decrease or 3.38%, as of 07:39*.
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