Oil prices hit 2.5-year high on explosion at major oil pipeline in Libya

An explosion at an oil pipeline running to the Es Sider terminal in Libya sent oil prices to highs last seen in May 2015, as the incident is expected to cause crude production to decline between 70,000 b/d and 100,000 b/d.

Oil futures were rallying on the news. ICE February Brent was $1.57 higher at $66.82/b. That was the highest level for the prompt contract since May 2015.

The explosion occurred at the Al-Zouk oil line, which connects the fields in the Mouradah basin and Sider oil port, NOC said in a statement.

Waha Oil Co., which operates in the area, “has immediately diverted production to the Samah line. However, NOC expects a reduction in production of between 70,000 to 100,000 barrels a day,” the statement said.

Waha operates the Waha, Samah, Dahra and Gialo fields, along with Es Sider and the pipeline network that carries crude from fields operated by Wintershall and Total to the export terminal.

In November, the company outlined plans to boost production to 600,000 b/d. Waha was producing over 260,000 b/d before the incident. Libya’s total crude production was estimated to average at 950,000 b/d in November, according to survey by S&P Global Platts.

Waha is a joint venture of NOC and US companies ConocoPhillips, Marathon Oil and Hess.

Early investigations revealed that the explosion occurred at the line 15 km away from Mouradah, NOC said.