According to sources, the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) are closely monitoring the resumption of oil output in Libya to see if there is a sustainable restart before it reacts.

The North African Member Country of the Organisation has been exempted from the cut deal by the Members of the Organisation and its allies which is aimed at stabilising the global oil prices and to aid the recovery of the global oil market. A restart of oil production and output in Libya is seen as one that may force other producers to further reduce their rates and support prices.

On Monday, oil prices fell towards $42 a barrel as coronavirus cases are rising in some part of the world, and as the possible return of Libyan production is expected.

Last Saturday, the National Oil Corporation of Libya (NOC) lifted force majeure on what it deemed secure ports and facilities, and restart procedures are underway at some locations following a blockade beginning in January that cut production.

According to reports, three (3) OPEC sources said they were still monitoring the situation and time was needed to assess the situation. One of the sources said, “At this stage, we should watch for some time,” one of the OPEC sources said, declining to be identified. “But the market is reacting much faster on bearish sentiment.”

Another delegate said the restart of Libyan production was not the concern but rather demand weakening again due to a new round of coronavirus lockdowns is the worry. “The bottom line will be how governments react to COVID-19 over the next few months,” the source said. “And this is anyone’s guess.”

Since May 1^st, OPEC and its allies cut global supply by 9.7 million barrels per day to support prices amidst the coronavirus pandemic. From August 1^st, the supply cut was reduced to 7.7 million barrels per day. The supply cut will last for a while until the global oil market makes a complete recovery from its historic drop in prices in April due to the pandemic.