Elite use destabilization to create artificial oil shortages

Two years after local militias overthrew the Libyan dictator Col. Muammar el-Qaddafi, many of those same fighters have brought Libya’s critical oil industry to a halt. Disturbances at several large export terminals and oil fields have throttled Libya’s daily oil production to one-tenth its capacity in recent days, jeopardizing the national economy and tightening world oil supplies at a time when unrest is spreading in the Middle East. http://www.nytimes.com/2013/09/13/world/africa/in-libya-unrest-brings-oil-industry-to-standstill.html?ref=world
The crisis began last month when armed groups seized the country’s major oil export terminals, claiming that the national oil company had engaged in corrupt sales. They also demanded autonomy for the eastern region where the rebellion against the Qaddafi government had been strongest. The protests have since moved west, carried out mainly by guards of several oil fields and pipelines seeking higher payments from the government.

International oil executives are watching developments carefully to see if Tripoli can regain control of the country and ensure security for foreign investment.

Unrest in Syria and Egypt potentially threatens to spread more widely through oil-producing regions of the Middle East, especially Iraq. Persistent attacks on a major pipeline in northern Iraq have already interrupted as much as 150,000 barrels a day of production in recent weeks.

Global oil prices, which have risen moderately over the past month, would probably have climbed much higher had Saudi Arabia not increased its production to the highest level in 32 years to compensate for the lost Libyan crude.

But production fell in recent months to 550,000 barrels a day, and in recent days to as low as 150,000 barrels. Exports have tumbled to 80,000 barrels a day.

OMV, an Austrian oil company that is a major producer in Libya, announced this week that it was suspending production.

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