Libyan central bank reserves to fall 20% as oil revenues sink: Audit bureau

A picture shows a general view at the Zueitina oil terminal. (File/AFP)
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Updated 02 May 2020

Libyan central bank reserves to fall 20% as oil revenues sink: Audit bureau

  • Annual oil revenues are expected to fall to $5 billion from $31 billion last year, dragging the central bank reserves down to $50 billion
  • The fiscal deficit is forecast to reach 26.7 billion dinars ($19 billion) this year compared to a surplus of 11 billion dinars in 2019

TUNIS: Libya’s central bank reserves are seen falling by about 20% this year because of a blockade on energy exports by eastern-based forces that has slashed revenues, the audit bureau said.
Annual oil revenues are expected to fall to $5 billion from $31 billion last year, dragging the central bank reserves down to $50 billion, it said.
Eastern-based forces shut down oil exports in January. Global oil prices have also crashed as the coronavirus pandemic hits demand, with no prospect of a quick recovery in sight.
The fiscal deficit is forecast to reach 26.7 billion dinars ($19 billion) this year compared to a surplus of 11 billion dinars in 2019, the Tripoli-based audit bureau said in a video posted on Facebook on Friday.
Libya has been split since 2014 between the internationally recognized Government of National Accord (GNA) in Tripoli and a rival administration in Benghazi that controls eastern Libya and has set up parallel institutions.
Although most oil production and export facilities are in the east, international agreements mean it can only be sold by the National Oil Company (NOC) in Tripoli, with revenue flowing through the Tripoli-based Central Bank of Libya (CBL).
The oil revenue is then used to finance state operations across the country, including the salaries of public sector employees in the east as well as areas controlled by the GNA.
Eastern-based forces shut off exports in January and the oil price has since crashed, leading to an immediate reduction in revenue.
The GNA earlier this year issued a state budget with forecast spending but without giving figures for expected revenues.


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”