Libya oil production to shut down completely-BofA

LONDON Thu Feb 24, 2011 2:38pm EST

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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. (Reporting by Jessica Donati; editing by Marguerita Choy)

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Comments (13)
Mike_88 wrote:
Looks like the world has a new reserve. Savings and a soon to be ousted leader.

Feb 25, 2011 9:53am EST  --  Report as abuse
mascmen7 wrote:
Crazed treasonous Democrats in USA will not allow any USA drilling for oil from Comrade Obama on down as Cuba has begun drilling 60 miles of Florida Keys.

Feb 25, 2011 12:01pm EST  --  Report as abuse
toray99 wrote:
Obama wants chaos. Don’t forget what he said when he was running for prez. Energy Prices Will Skyrocket Under My Cap and Trade Plan
In all honesty if you wanted to take down the USA, wouldn’t you have the same policies that obama has ?
Read more: http://newsbusters.org/blogs/kerry-picket/2008/11/02/obama-energy-prices-will-skyrocket#ixzz1F00oJY16

Feb 25, 2011 2:09pm EST  --  Report as abuse
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