Oil price and the effect of Libyan war
A small player that provokes big repercussions
Despite Libya produces only about 2 percent of the world’s oil, and despite Saudi Arabia has replaced 70% of Libya’s missing oil production, its war is causing disastrous effects worlwide. In February 22 Colonel Gaddafi said he would fight to his “last drop of blood” to remain at the helm and denounced protesters as “mercenaries” who were drugged and manipulated by foreign powers wanting to turn Libya into an Islamic state. That day OPEC daily basket oil price went up by 3.4%, the third largest oil price spike so far this year 2011. Two days later the price of oil scalated another 4.8% to US$ 111.01 a barrel, the biggest oil price increase in 2011.
The OPEC daily basket oil price
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
The conflict in Libya started in protests against Gadafi’s regime in the eastern port city of Benghazi, and spread to Zintan, al Bayda and Quba. Since then, the oil price evolved from US$99 to a maximum of US$120.91 in April 28. A 21% oil price increase might seem big, but in fact it is huge.
Taking into account that the daily supply from the Organization of Petroleum Exporting Countries’ 12 members rose to 30.05 million barrels a day in July from 29.94 million in June, it means that the acquisition cost of OPEC’s daily oil production (responsible for 40% of world’s oil production) increased over US$657 million in just a couple of months. But as Gaddafi’s regime is closer to an end the oil price is having a small rest, with a 5% fall in August.
Libya’s war timeline
February 22. Colonel Gaddafi says he will fight to his “last drop of blood” to remain at the helm and denounces protesters as “mercenaries” who were drugged and manipulated by foreign powers wanting to turn Libya into an Islamic state.
February 24. Anti-Libyan government militias take control of Misrata after evicting forces loyal to Gaddafi.
February 28. EU governments approve a package of sanctions against Gaddafi and his closest advisers including an arms embargo and bans on travel to the bloc.
March 10. France became the first country in the world to recognize the National Interim Council as Libya’s only legitimate government. The same day, government forces retook Az Zawiyah and Ra’s Lanuf, supported by tanks, artillery, warplanes, and warships.
March 16. Forces loyal to Gaddafi are near rebel-held Benghazi. Gaddafi’s son Saif al-Islam tells France-based TV channel Euronews: “Everything will be over in 48 hours.”
March 17. The UN Security Council authorises a no-fly zone and “all necessary measures” to enforce it to protect civilians. Within days, British Tornadoes are engaged in ground attacks and Tomahawk missiles are fired from British submarines.
March 22. Pro-government troops retake Ajdabiya, Zawiyah, Ras Lanuf and parts of Brega, and lay siege to Misurata, blocking the arrival of medicine and food at the port to around 5,000 people. In the following weeks, control of key cities swings back and forward.
April 10. Gaddafi accepts a roadmap for ending the conflict, South African President Jacob Zuma says after leading a delegation of four African leaders at talks in Tripoli. Rebels reject the plan the next day.
April 30. Gaddafi’s youngest son Saif al-Arab is killed by a Nato airstrike, along with three grandchildren. The following day, the British and Italian Embassies in Tripoli are attacked.
May 4. NATO Secretary-General Anders Fogh Rasmussen claimed that the Libyan government’s military capabilities had been significantly degraded since the operation started
May 5. The Royal Navy mine clearance vessel HMS Brocklesby located and destroyed the final mine at the entrance to the port of Misrata. NATO aircraft conducted numerous airstrikes against loyalist forces near Misrata and Ajdabiya, and military targets in Tripoli.
May 6. NATO conducted 57 airstrikes against loyalist military targets throughout Libya, while opposition forces gained full control of Al Kufra and Abu Rawayah after Gaddafi forces stationed there surrendered
May 12. NATO carried out 52 strikes against loyalist targets. Loyalist forces fired at least three rockets into Ajdabiya. Loyalist forces also launched an attack on Misrata port, using a number of small boats, but were forced to abandon their attack after NATO warships intervened.
June 8. Western and Arab nations meet rebels in Abu Dhabi discussing what U.S. officials call the “end-game” for Gaddafi.
June 15. Libya approves a $31.4 billion budget for the rest of 2011, to show it is functioning as normal.
June 27. The International Criminal Court in The Hague issues a warrant for the arrest of Gaddafi, his son Saif al-Islam and his head of intelligence.
July 27. Rebels win diplomatic recognition from Britain which also expels the remaining Gaddafi diplomats from London.
July 28. General Abdel Fatah Younus, senior rebel forces commander, is arrested by members of the NTC questioning his loyalty. His body is found the following day. The death prompts fears of a split in the rebel camp.
August 3. the rebels defeated an attempt by Gaddafi’s forces to retake Zliten. Meanwhile, NATO bombed Zliten and Tajura, near Tripoli, and the rebels captured a Gaddafi ship laden with 250,000 barrels of oil
August 6. Rebels from the mountain town of Yafran launched a major attack on the town of Bir Ghanam and conquered it by midday after Gaddafi’s forces retreated from the town. Meanwhile Qatar supplied the rebels in Misrata with more weapons, and a renewed assault began on Brega. The government in Benghazi announced it had flown $10 million to the rebels in the Nafusa Mountains region
August 18. Rebel forces seized control of the crucial oil refinery in Az Zawiyah while journalists confirmed that they were in complete control of Gharyan
August 22. Not long after midnight, reports say rebels have reached Green Square, the city centre and the symbolic heart of the Gaddafi regime. But not all of the capital has fallen – foreign reporters inside the Rixos hotel say it remains under government control.
August 23. Libya’s oil production to recover more quickly than forecast after rebels’ “sudden takeover” of fields and export facilities, delaying the need for OPEC to tap spare capacity, Goldman Sachs reports.
August 27. Western news websites were reporting and showing pictures of the rebels entering the houses of Gaddafi’s sons and daughter in Tripoli.
This is a nonprofit explanation