Oil Supply Crisis From War in Libya? Free Trade Begs to Differ

Thursday, April 7, 2011
By Paul Martin

by Dian L. Chu
OilPrice.com
Wednesday, 06 April 2011

The recent news from Libya suggests that a transitional government is already being put in place as BBC reports that Libya’s opposition groups is set to export first oil shipment, and are making plans to load a tanker due to dock at a terminal near Tobruk. And there were unconfirmed reports that the tanker en route to Libya was the Liberia-flagged Equator vessel, owned by Greece-based Dynacom Management, according to BBC.

Rebels Making Oil Deal
That news came following the annoucement by Ali Tarhouni, the finance minister for the Libyan opposition, a University of Washington lecturer who returned to Libya nearly a month ago to help the opposition, that Libyan rebels have signed a deal with Qatar to market their crude oil abroad in exchange for food, medicine and fuel. In late March, Tarhoni also said the rebels, who were at the time in control of all the country’s eastern oil facilities, expected to begin exporting crude “in less than a week”.

Libyan Oil Offline For Years?
This suggests that much of the fear that Libya oil export could be offline ‘for years’ or even ‘indefinitely’ seems to be somewhat hyperbole, and a bit of a red herring. It appears that the Qaddafi regime is crumbling according to information gleaned from the recent defection of Libyan Foreign Minister Moussa Koussa, and it could be only a matter of time before the unrest in Libya is resolved with the stepping down of Qaddafi.

Recent news also pointed to members of the Qaddafi regime were trying to negotiate a way out of their current predicament, once the no-fly zone was established. By the way, no-fly zone essentially means the oil assets are pretty safe from harm, while realistically, both sides were never going to harm the oil assets, as that is how all of their power is derived–no oil assets equates to no power in Libya.

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