Libyan oil production may take years to recover if the history of supply shocks in Iran, Iraq and the Soviet Union is anything to go by.
The CHART OF THE DAY shows that the restoration of full production in the former Soviet Union after the end of communism took a decade. Iraq needed four years to equal the output that preceded the 2003 U.S. invasion, and it remains below the level before the war with Iran in 1980. Three decades after the 1979 revolution, production in Iran has yet to be completely restored.
“Often the most difficult time of a regime change is after the change,” said Peter Hutton, an analyst at RBC Capital Markets in London. “Libya’s not as extreme a case as Iran, Russia or Iraq, but it’s not going to be easy.”
Libyan production will reach 450,000 barrels of oil equivalent a day by the end of the year and 900,000 barrels a day next year, according to Citigroup estimates published in a research note today. Before the civil war, production was at 1.3 million barrels a day.