Oil Futures Up on Disruption in Libya, Easing Restrictions
price firmness early Monday follow reports California Governor Gavin Newsom is preparing to lift some COVID-19 restrictions imposed across the gasoline-guzzling state over a month ago. Similar moves were announced by Michigan Governor Gretchen Whitmer and Washington, D.C., Mayor Muriel Bowser, who allowed restaurants and gyms to resume indoor services at 25% capacity, concessions at entertainment venues and gatherings of up to 10 people. The easing of quarantine restrictions came as U.S. new coronavirus cases declined to 129,527 on Sunday, with seven-day average infections remaining below 200 since Jan. 17.
“The pause has worked,” Whitmer said. “The efforts we have made together to protect our families, frontline workers and hospitals have dramatically reduced cases and we are confident that starting Feb. 1, restaurants can resume indoor dining with safety measures in place.”
Despite these encouraging signs, the Biden administration moved to restrict travel from the United Kingdom, Brazil and South Africa — epicenters of new virus variants that some scientists believe to be not only more transmittable but also deadlier. The B117 variant first detected in England a month ago has now spread across 20 U.S. states and is projected to become a dominant strain within two months. It remains unclear whether vaccines will be as effective against the new variants as it was against the original SARS-2 COVID-19 virus.
Countries around the world are implementing new travel restrictions and lockdown measures to combat the spread of new variants. Israel announced Sunday it would close its international airport, Ben Gurion International Airport, for one week to stop the spread of the coronavirus. Australia said it would suspend New Zealand’s “green zone travel status” after a woman there acquired the South African variant. Similar bans on international travel were introduced last week from Germany to China.
Separately, oil traders are keeping an eye on a possible supply disruption in Libya after a few guardsmen at the ports of Ras Lanuf, Es Sider and Hariga blocked crude exports in what is believed to be a dispute over pay. The facilities normally export more than half of Libya’s exports of 1.2 million barrels per day (bpd). Libya’s National Oil Corp. might have to declare force majeure on key oil exports if the threat by oil guards to stop port loadings leads to sustained disruptions, according to some analysts.
Furthermore, Libya might face yet another supply-side risk over reports that traders are rejecting cargoes due to high levels of mercury which can damage refinery equipment for the Amna, Abu Attifel and Zueitina blends. Together, these blends make up about 10% of total Libyan oil production, therefore concerns over an underlying issue of damaged infrastructure and quality of Libya’s crude would pose a downside risk to the country’s profile.
Liubov Georges can be reached at email@example.com