The uprising in Libya has cut its oil output by half, the International Energy Agency said on Monday, but Saudi Arabia's pledge to pump more helped to prevent a further surge in the price of oil.
The head of Italian oil company ENI, the biggest foreign operator in Libya, said he thought two-thirds of Libyan oil and gas output had been halted and warned oil extraction could halt if shipments did not resume.
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Foreign firms have been pulling staff out of Libya due to the uprising against Muammar Gaddafi's rule. China's three major state-owned oil and gas companies have evacuated all their Chinese employees.
U.S. oil firm Marathon Oil Corp also said it had evacuated all expatriate employees and their dependents from Libya, while ConocoPhillips said it had closed its operations there and evacuated some employees due to the unrest.
About half of Libya's 1.6 million barrels per day (bpd) of production had been cut, IEA Chief Economist Fatih Birol told Reuters Insider TV, citing industry reports. That is higher than the IEA estimated initially.
Oil prices jumped toward $120 a barrel last week for the first time since 2008 because of the disruption in Libya, the world's 12th largest oil exporter.
Prices have since eased to $112, partly because Saudi Arabia has promised to meet any shortages.
"This is not good news for suppliers in the market but at the same time it is very comforting that Saudi Arabia showed their readiness to make up," Birol told Reuters in the interview.
All demands for extra oil have been met, the head of Saudi state oil company Saudi Aramco said on Monday. The kingdom has boosted its output to around 9 million bpd, a senior Saudi source told Reuters, to meet demand.
"All incremental needs requested by our customers have been met," Saudi Aramco CEO Khalid al-Falih said.
OUT FOR MONTHS?
As well as the scale of the loss of Libya's oil, the duration of the shutdown is also a concern to oil markets. Some analysts expect it may be out for a while.
"With Libya apparently at risk of a civil war, there are reasons to believe that oil supplies in that country could be off for months," Bank of America Merrill Lynch said in a note.
Libya's oil exports and oil tanker loadings remained at a virtual standstill. The country exports about 1.3 million bpd of high-quality crude, mostly to Europe.
The size of the cut in Libya's oil output remains unclear partly because of disrupted communications with the country.
Eni's chief executive, Paolo Scaroni, said on Monday he thought two-thirds of Libyan oil and gas output had been halted. He had put the disruption at 1.2 million bpd, or 75 percent, last week.
Most of Libya's oilfields are no longer under Gaddafi's control, the European Union's energy commissioner said on Monday.
A unit of Libya's state-owned National Oil Corp has decided to operate separately from its parent until Gaddafi is overthrown and Tripoli is free of his rule, an official said.