LONDON, Feb 24 (Reuters) - Oil production in Libya is expected to shut down completely and could be lost for a prolonged period of time, Bank of America Merrill Lynch said on Thursday.
"We expect Libyan production to be shut down completely and we might lose sweet crudes from Libya for a prolonged period of time," Bank of America Merrill Lynch analyst Sabine Schels told Reuters.
Schels said that the world faced the prospect of real supply shock in which the loss of 1.6 million barrels per day of sweet oil could potentially trigger a steep rise in prices and force a sharp reduction in demand to balance the system.
"Some of the supply can be replaced with Saudi light crude and some from SPR, but if the disruption is prolonged, we will need demand to drop to balance the system," Schels said.
The bank is currently discussing scenarios and outlooks, and will publish a report on its findings in the coming days.
"We already faced a demand shock last year with global demand increasing by 2.8 million bpd and on top of that, what we have now is a real supply shock," Schels said.
"In a price shock scenario whereby we lose 1.6 million bpd, the rise in prices can be a lot greater than in the case of a demand shock.
13 comments:
Well America uses about 20 million barrels of oil a day, I don't think that 1.6 million lost would really put a dint in our consumsions if we have been able to sustain ourselfs even if they are giving us 1.6 million barrels. It jar doesn't seem that big in comparison with other nations that we get oil from. I don't really understand how if something good happens in the oil company it take months for us to feel the impact and the price goes does, but if something bad happens the same day we will see that the prices go up.
It's about time that America gets a wake up call to find an alternative source of fuel. The naturalists however won't like some of the steps we'll have to take to become more self-sufficient. Oil production in Alaska and Texas will both have to up their game to compete with the rising scarcity of oil products all over the world.
This is such a terrible scenario for us as Americans to hear. With this war in Libya starting this means that our gas prices are about to sky rocket, some reports say that we are going to be easily into the 5 dollars or more by summer. All the businesses are going to slow down which will result in loss of hours for employees and maybe even a loss in their job completely. Economists say we got out of our recession but i think were about to jump right back into a deeper hole.
Losing the Libyan oil supply due to the revolution may allow foreign influence to be brought into to have Gadhafi step down. While little to none of the oil produced in Libya goes to the US, I would assume most of it goes to supply Europe. The European Union could impose economic sanctions on the Libyan Gadhafi government to prevent any further support of the regime. North Africa and Europe need oil, and the loss of 1.6 million barrels per day will have an effect on the status on some economies, the price shock is not only being felt in the region though with even Lubbock prices rising sharply in just a couple weeks. Having this strain placed on the European community, the rebel forces may get international backing.
Libya's leader needs to realize that no good can come out of such a decision. With such a large supply behind them, he will be crippling his clients and boosting the business of other oil based countries. I just hope this doesn't last too long.
This will definitely be bad for the country as a whole but, luckily for us, we live in Texas and have a fair amount of oil in our land so it is not likely yo hit us as hard. Still, we will definitely see a rise in gas prices and people will moan and cry for awhile. It is nothing that is not easily handled though. I would definitely say it is not as big as some people are making it. Now if someone said everyone one of our major suppliers decided to quit selling us oil, we would definitely be in a bind at that point.
This really, honestly, truly sucks. I hope that Libya wont cut us off for that long, because they could cause problems with their own economy. We are the main buyer and without us they are bound to be affected some how. I love my money and I'm not going to spend $6 a gallon for gas, that's just too high. I really hope that Libya will not shut down it's oil production and if they do I hope that the repercussions of that will not be too severe.
Libya is undergoing political problems that can have an impact to the economic system. According to Bank of America analyst , Sabine Schels, the supply provided by Libya will go down by 1.6 million bpd. If this proves to be true, prices of gasoline will increase. The problem with this is that all prices will rise because of the costs of transportation. In this case it will be necessary to look for oil supply in other countries.
The loss of 1.6 billion barrels of oil a day from Lybia would be insignigicant if the U.S. had not cut the nation's oil production by almost one half in the last 30 years.
http://www.eia.doe.gov/aer/txt/ptb1105.html
All I have to say is that these prices need to go down. I don't care whether they have to open up our oil reserves in America reguardless of the 'pollution' or whatever they're saying might happen if they use our oil. Whatever happens I don't care as long as the gas prices go down. I personally say that we don't even bother with the foreign countries anymore for oil. America should just stick to themselves and not be dependent on other countries for our needs.
Yay for oil production being completely shut down in Libya!(not)I hope they fix this problem immediately, because I'm definitely not made of money and I can not walk to school everyday since I live in Slaton. I wish the United States was not so dependent on oil, but I guess it will teach all Americans to be less depndent on other nations and hopefully we will be able to find alterior motives in our country.
Yay for oil production being completely shut down in Libya!(not)I hope they fix this problem immediately, because I'm definitely not made of money and I can not walk to school everyday since I live in Slaton. I wish the United States was not so dependent on oil, but I guess it will teach all Americans to be less depndent on other nations and hopefully we will be able to find alterior motives in our country.
Wow. This could be a problem...
I think its safe to say that if you have a ford f350 its time to go get a car with more efficient gas mileage unless you are absolutely loaded. If Libya follows through with this then people throughout our nation may be forced into an extreme culture change. Very few people can afford 7 dollar a gallon prices. This could cause automobile sales to plummet and as a result cause the public transportation industry flourish in more places than just New York.
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