Libya has the largest oil reserves in Africa and very ‘under-exploited’ (so I read here…) 95% of it’s export earnings are dependent on the hydrocarbon industry.
In February Oil prices rose with unrest in Libya and the risk of contagion in the region.
Current output is at 100,000 bpd, pre-war output was 1.6 million bpd and globally oil is under pressure as global economic weekness threatens demand.
The question I’m asking: Will the departure of Muammar Gaddafi generate additional downward pressure on the price of oil? That day seems to be approaching and presumably supply pressures will be reduced as Libya rushes to get back online.
Granted, it might take many years to return to pre-war output levels but we’re approaching a resistance level and expecting “liberation” any day now. Might this not add to supply, at least in the eyes of mainstream media? Might reconstruction progress faster than expected? I’m positioning for weakness in $USO.
The ETF I follow is United States Oil. $USO.