The collapse of Muammar Gaddafi’s regime in Libya sent prices for Brent crude (which are linked to Middle Eastern affairs) down by $0.44 after initially dropping by 3%.
The Italian oil producer Eni predicted that normal oil exports might resume in up to a year. Other analysts suggested that restoring production might take up to three years. The former Libyan oil minister for the regime who defected to the rebels told Platts, an oil industry publication, that “damage and looting” would keep production below prewar levels for up to two years.
Iraq’s oil output remained below pre-invasion levels until 2008 after the U.S.-led invasion in 2003.
Analysts suggested that Libyan oil facilities were mostly undamaged by the half-year civil war, although some argue that those in Gaddafi’s stronghold central region require extensive repairs.
U.S. crude oil prices rose over 2% in Monday’s trading, lending credence to analysts’ predictions that the collapse of the Libyan regime will not lower oil prices significantly in the near-term.
Some predict that Saudi Arabia, which increased production during the civil war, will reduce its production as Libyan production resumes, mitigating price changes.