Libya's National Oil Corporation (NOC) shut down its Brega oil port on Tuesday, extending a string of crude plant closures due to political turmoil in the country.
The company declared a state of force majeure on the port "because it is impossible to implement its commitments towards the oil market", it said in a statement on its website.
Force majeure refers to an unforeseen set of circumstances preventing a party from fulfilling a contract.
The latest closure comes after NOC shut down its Al Sharara oilfield and Zueitina port on Monday and warned of "the start of a painful wave of closures”. It also declared force majeure at its El Feel oilfield, known as the Elephant field, on Sunday.
"At a time when oil prices are recovering significantly due to increased global demand ... the Libyan crude is being subjected to a wave of illegal closures, which will have serious damage to wells, reservoirs and surface equipment for the oil sector, as well as the loss of state treasury opportunities at prices that may not be repeated for decades to come," the NOC said.
The oil market has remained tumultuous since Russia began its military offensive in Ukraine in late February. Brent, which rose 67 per cent last year, climbed to a notch under $140 per barrel in March. It fell briefly under the $100 per barrel mark after a co-ordinated release of record oil inventories by the International Energy Agency and the US from emergency stockpiles, but recovered quickly.
The Libyan closures are anticipated to further support oil prices. Libya, an Opec member, produces about 1.2 million barrels of oil a day and is exempt from the Opec+ production deal because of security concerns.
Brent, the benchmark for two thirds of the world's oil, was up 0.96 per cent at $108.30 a barrel at 1.12pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 1.07 per cent higher at $103.70 per barrel.
The NOC said on Tuesday that the shutdown of production at the Sirte oil and gas production and manufacturing company, at Brega, "will have implications for the stability of the public electricity network, especially the eastern region, as most power plants feed on gas produced from the company's fields".
The company had earlier stressed the importance of “neutralising” the oil sector and avoiding political conflict in the country.
Libya, which has largely sweet oil, has seen much of its production remain offline during the civil war that erupted between factions after the downfall of former Libya leader Muammar Qaddafi in 2011.
The country has had two competing governments since March and these rival administrations could herald a return to division and instability, the UN said last month.
"Despite production averaging 1 million barrels per day in the first quarter, the situation [in Libya] elicits reminders of the disputed 2014 election after which two rival governments emerged and crude production was capped below 500,000 bpd for nearly two years," S&P Global Commodity Insights said.
