Libya and Nigeria hope to restart exports that could add substantially to the global glut

Both the IEA and OPEC pushed out their forecasts for market balance this week as supply continues to prove resistant to the drop in crude oil prices. Even more crude oil could come back to the market from Libya and Nigeria in coming days, however, making market balance an even more distant reality.

Libya’s state oil company said Wednesday that it plans to resume crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially bringing 300 MBOPD back to markets. In Nigeria, Exxon Mobil (ticker: XOM) is believed to be ready to resume shipments of Qua Iboe crude, the country’s biggest export grade, which averaged about 340 MBOPD in shipments last year. On top of that, a second Nigerian grade operated by Royal Dutch Shell (ticker: RDSA) is scheduled to restart about 200 MBOPD of flow within days.

All told, the two countries could add more than 800 MBOPD back into the market, reports Bloomberg.

It remains to be seen if the two OPEC members can deliver

Crude oil shipments from both Libya and Nigeria have been under force majeure due to a civil war and militant attacks on infrastructure, respectively. Libya has made pledges in the past to restart production from its ports, all of which have proved unsuccessful, but the national oil company does have a deal with Khalifa Haftar, the commander of the forces who took control of Es Sider and Ras Lanuf, on their side this time.

In Nigeria, sources report that Exxon has filled storage facilities at its Qua Iboe export terminal in Nigeria, and is awaiting government clearance to resume shipments. Exxon has declined to provide a timeline for a restart at those facilities, however, and said that a force majeure still stands.

Increased production could complicate OPEC meeting

The potential return of more oil to the market could make OPEC’s attempts to normalize oil prices more difficult. The group is set to meet in Algeria later this month to discuss a possible output freeze. Saudi Arabia and Russia have agreed to work together in order to stabilize oil prices, but an influx of oil from OPEC members could make it more difficult for the group to meet its own quotas.

EIA has oil under $50 through 2017

Yesterday the U.S. EIA put out its annual energy outlook, saying its models show prices under $50 through 2017. “Total U.S. oil production in the AEO2016 Reference case falls from 9.4 million barrels per day (b/d) in 2015 to 8.6 million b/d in 2017.

“After 2017, the total production grows to 11.3 million b/d in 2040 as real (2016 dollars) crude oil prices recover from an annual average of less than $50/barrel (b) in 2017 to more than $130/b in 2040.”

OPEC production continues to rise as prices fall

“If you have some restart of Nigeria and some restart of Libya, then the rebalancing gets pushed even further out,” Olivier Jakob, managing director at Petromatrix GmbH, said. “It complicates matters a lot before the meeting in Algeria.”

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