Petroleum Africa
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Tuesday, July 2, 2013
It seems some North African countries cannot get a break when it comes to returning to normalcy following the Arab Spring of 2011. Both Libya and Egypt are facing their own set of stability problems which is, in turn, affecting global petroleum prices.
In Libya the country saw its Sharara oilfield shut down by NOC as a dispute erupted over securing the facility.
“The field is shut down,” a senior Libyan oil industry source was quoted as saying in a Reuters report. “A decision was taken by the operator, NOC and the oil ministry to conduct a safe shutdown given a conflicting situation around the oilfield.”
This is just the latest incident in a long line of shut ins and protests the country has seen since the ouster of Muammar Qaddafi. Not just oilfields have been shut in but also export terminals such as the Zueitina Oil Terminal have been closed due to protests, disrupting Libya’s number one export revenue generator and lessening crude supplies on the global market.
In Egypt the protests currently taking place against President Mohamed Morsi are making their own impact on global oil prices. As thousands upon thousands gather on the streets in Cairo, speculation grows on oil supplies. While Egypt does not really contribute all that much to the global supply the instability of the country at this time could cause tensions to rise throughout the Middle East and possibly impact oil supplies.
Crude prices on the NYSE rose on Monday for August delivery over $1.40 to close at $97.99 per barrel and in London Brent crude gained 84 cents to end at $103 a barrel on the ICE Futures exchange.
There is also the fact that a significant amount of crude produced in the Middle East traverses through Egypt’s Suez Canal and any security issues on the canal could send prices spiraling upward. At this time the Egyptian government says the Suez Canal is secure, having beefed up security in the area. However, since the same army that is guarding the canal is the same army that issued an ultimatum to the president on June 1, its security is in question.
General Abdel Fattah Al Sisi issued an ultimatum to the president telling him to reach a power-sharing agreement with his political rivals within 48 hours or the military would step in and resolve the situation. Many an Egyptian has been waiting for just this to happen, but whether the military sticks to its ultimatum is anyones’ guess. It should be noted that more than one minister in Morsi’s cabinet resigned amid the protests.
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