Quick update on a copper market item I flagged in early December. Noting that a pending tax on concentrate imports into the nation of Zambia could have critical implications for global copper supply.
That turned out to be a non-event this past week. When Zambia finance minister Felix Mutati announced that the government is dropping the proposed concentrate import tax — meaning that imports should continue uninterrupted, causing no disruptions to the global market.
But elsewhere in the world, government moves are going ahead that could affect another key commodities market.
That’s in former major producing nation Libya. Where the country’s national oil company reported this past week that operations have finally restarted at one of the largest domestic oil fields — which has been missing in action for over two years now.
Unnamed sources in the Libyan National Oil Company told Reuters that a pipeline leading to the Sharara oil field in western Libya has been reactivated. Which could add 270,000 barrels per day to national output over the next three months.
That would be a major victory for Libya’s oil industry. With the Sharara field having been largely shuttered by local rebel groups since November 2014 — representing a two-year interruption in output for this mega-field.
The unrest here also took the neighboring El Feel oil field offline. Which has also now been reconnected — with that development having a reported capacity of 90,000 barrels per day.
All of which could mean a good chunk of new oil production hitting the global market over the next several months. Especially given that Libya was exempted from the recent OPEC deal to lower production quotas.
That could put downward momentum on oil prices. Especially if Libya continues to bring production back on line elsewhere across the country — with the nation right now running at a fraction of its former production levels.
There have however, been several false starts in Libya’s efforts to work with rebel groups on oil production. Watch to see if output from Sharara and El Feel does indeed get going, and for follow-on announcements of other production restarts around the country.
Here’s to the long road back,