Tripoli, 27 July:
European customers have been lured back to the Libyan market by lower-priced crude. The price cuts follow a six-month . . .[restrict]dispute about the official selling price (OSP) of the crude, which sent many buyers elsewhere.
The loss of trade and consequent liftings forced the National Oil Corporation (NOC) to rethink its pricing. The result has been a sharp decrease on August crude prices. Bloomberg reports a $1.60 drop, meaning Es Sider crude is selling at a $1.30 discount to Brent crude.
June saw an abundance of sweet crude in Europe, of a similar grade to Libyan crude. This had a knock-on effect. Having OSPs that were already high meant Libyan crude was not priced competitively and traders took their business elsewhere.
Dissatisfaction with the OSPs had been voiced over the last six months. However, the NOC has only now taken action and lowered prices. Customers are hastening back to Libya and Es Sider crude was almost sold out after the new OSPs were announced.
The price cuts are temporary and it is expected that the NOC will increase its OSPs in September. However analysts believe prices are unlikely to rocket.
Libya has the largest oil reserves in Africa. Its location makes it an attractive option for European markets, which receive most of Libya’s oil output. [/restrict]