Monday, February 28, 2011

Oil Flows as Rebels Gain

At WSJ, "Libyan Opposition Presses Gadhafi, Establishes Government, Sets Crude Shipment":

Libyan rebels pressed the regime of Col. Moammar Gadhafi Sunday, taking control of a key city near the capital of Tripoli, declaring a provisional government and allowing oil shipments to resume from territory under their control.

An oil tanker was expected to depart the port of Tobruk in the northeast corner of Libya sometime Sunday night carrying 700,000 barrels of oil, said Hassan Bulifa, a member of the management committee of Arabian Gulf Oil Co., Libya's largest oil producer and the only oil company based in the country's opposition-controlled eastern territory.

The management committee has assumed control of day-to-day operations at the company after its chairman, Abdulwanis Saad, resigned during the uprising against Col. Gadhafi. Mr. Bulifa said he believed the tanker would be bound for China.

The turmoil across the Middle East, cradle of much of the world's oil production, has sent prices soaring. Last week, crude oil for April delivery on the New York Mercantile Exchange rose $8.17 per barrel, or 9.11%, to $97.88, and for the seventh time since 1982 prices jumped 10% within two days. Month-to-date, U.S. benchmark crude is up 6.17%.

The Arabian Gulf Oil shipment would be the first oil exported from the eastern territory in more than a week—the last left on Feb. 19, before much of eastern Libya had slipped out of government control. Money earned from exports from rebel-controlled territory still goes into the accounts belonging to the National Oil Co., which is based in Tripoli and remains under the control of Mr. Gadhafi's government. Nevertheless, the relaunching of exports would be good news for Arabian Gulf Oil, which has had to cut back production rates for fear of running out of storage capacity amid a lack of export outlets.
More at the link.