The International Energy Agency said today that increased oil supplies from Saudi Arabia are heading for the Mediterranean Sea after the conflict in Libya shut in more than half of the country’s production.
Violent clashes between opponents of Libyan leader Muammar Qaddafi and forces loyal to him have reduced the nation’s oil output by at least 850,000 barrels a day from 1.6 million before the conflict, according to a statement on the website of the Paris-based agency.
“Saudi Arabia has been actively offering extra crude supplies to offset the lost Libyan barrels, with several buyers expressing interest,” the IEA said.
More Saudi oil is “reportedly” flowing through the kingdom’s 1,200-kilometer (750-mile) East-West pipeline from the 7 million-barrel-a-day Abqaiq processing facility in the eastern part of the kingdom to the Red Sea port of Yanbu for shipment to the Mediterranean, the agency said.
“We are aware of increased volumes from Saudi Arabia but don’t know the exact amount,” Diane Munro, the IEA’s supply analyst, said in a telephone interview from Paris today.
Saudi oil is generally higher in sulfur than Libyan, though the kingdom’s Arab Super Light stream “is of similar quality,” the IEA said. “The lower light product yields and higher sulfur in most of these grades make them imperfect substitutes, but this will be mitigated to some extent by the generally increasing refinery flexibility seen in recent years.”
The “closest quality replacement” oils are from Algeria, the North Sea, West Africa and the Caspian Sea, the agency said. Of those, North Sea and Urals grades are the easiest short-haul alternatives, it said.
Brent crude oil for April settlement rose 78 cents, or 0.7 percent, to $112.14 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it touched $119.79, the highest price since Aug. 22, 2008. Brent gained 9.4 percent this week.
In its Feb. 10 monthly report, the IEA, which advises 28 nations on energy matters, estimated Saudi Arabia’s average January crude production at 8.6 million barrels a day, unchanged from December.
Commercial oil supplies in the industrialized nations of the Organization for Economic Cooperation and Development are “comfortable” with enough crude to cover 57.5 days of demand as of the end of December, the IEA said. That’s above a five-year average of 54.6 million.
An additional 1.6 billion barrels of public stockpiles, covering 34 more days of demand, are also in place, it said.
Libyan Output Curtailed
“Almost all international oil companies operating in Libya have reported partial or full shut-in of output,” the IEA said. These companies account for about 72 percent of production.
The IEA said the status was “still unclear” for the fields operated by the National Oil Corp., which accounts for the remaining 28 percent of production.
Oil for April delivery gained 60 cents, or 0.6 percent, to settle at $97.88 a barrel on the New York Mercantile Exchange. Oil touched $103.41 yesterday, the highest intraday price since Sept. 29, 2008.