(Updates with analyst comment seventh paragraph.)
Dec. 10 (Bloomberg) -- Ports in eastern Libya that helped boost international oil prices when they were halted more than four months ago are within days of reopening, the head of the nation’s energy-protection force said.
Es Sider and Ras Lanuf, with combined capacity of 600,000 barrels a day, and a third port, Zueitina, will restart on Dec. 15, Brigadier Idris Bukhamada, head of the Petroleum Facilities Guard, said by phone from Ajdabiya today. Ibrahim Al Jedran, a former regional PFG commander whose men blockaded five terminals starting July 28, agreed to the resumption after intervention by the Al Magharba tribe, Bukhamada said. Al Jedran, himself a member of the tribe, said at a press conference that resumption depends on three conditions being met.
Disrupted exports from Libya has helped buoy the price of Brent crude, which is used to price more than half of the world’s oil, according to Goldman Sachs Group Inc. and the International Energy Agency. An increase in supply from Libya and Iran would mean that other members of Organization of Petroleum Exporting Countries will have to trim output to prevent significant price drops, Deutsche Bank AG said today.
“It would mean a relatively big boost in supply coming out of Libya,” said Richard Mallinson, an analyst at Energy Aspects Ltd. in London, adding that there is still uncertainty about whether a resumption can take place as soon as Dec. 15.
Brent rose 13 percent in 2011 to as high as $127.02 a barrel as an armed uprising against Muammar Qaddafi all but halted exports and prompted IEA members to release emergency stockpiles for the third time in the agency’s history. The North Sea crude dropped as much as 84 cents to $108.55 following news of the reopening today. Brent’s premium to West Texas Intermediate oil narrowed to $10.90 a barrel as of 4:24 p.m. in London today, from $12.05 yesterday and $16.97 at the end of last month.
Libya’s crude output will increase to 1.5 million barrels a day within 10 days, from about 250,000 barrels currently, because political protests that have disrupted supply are being resolved, Libyan Oil Minister Abdulbari al-Arusi told reporters in Vienna on Dec. 3, a day before OPEC agreed to keep its output ceiling unchanged at 30 million barrels a day.
The potential reopening on Dec. 15 could be a start “of some Libyan barrels coming back to the market, which would mean that there is extra supply and therefore prices came off,” says Amrita Sen, chief oil market strategist at Energy Aspects.
OPEC’s crude output fell in November to the lowest level in more than two years, dropping below the group target for a third month in a row, the organization said today in a monthly report. Saudi Arabian production fell to a five-month low.
“If crude oil from Libya and Iran were additionally to return to the market, OPEC would have to make cuts elsewhere in order to keep the oil market balanced,” Commerzbank AG said in a report today.
Saleh Al Etweish, head of the Al Magharba tribe, said he was confident the tribe’s order to Al Jedran to reopen the terminals is final. Both men said the government must meet three conditions but differed on their timing.
Al Jedran wanted investigations into alleged illegal crude sales to start before the opening “or we will have another opinion about reopening on Dec. 15.” The other two terms announced today were on creating an independent committee to monitor exports and providing more development projects for eastern Libya, the two men said.
The Al Magharba tribe numbering in hundreds of thousand live on the eastern coast where the ports of Es Sider, Ras Lanuf and Zueitina are located, Al Etweish said yesterday. Al Etweish and Bukhamada didn’t comment on the situation at Hariga, another closed port with a capacity to handle 110,000 barrels a day.
--With assistance from Alaric Nightingale, Konstantin Rozhnov and Lananh Nguyen in London and Saleh Sarrar in Tripoli. Editors: Raj Rajendran, Stephen Voss