Does Democracy Cloud Libya's Oil Future?

Oil ports in eastern Libya had reopened by Monday, ending a weekend shutdown that coincided with the first democratic elections in a generation. NATO forces last year intervened in a civil war that ended with the death of long-time leader Moammar Gadhafi, opening the door for interim leaders to chart the path to democracy. Conflict in 2011 shut down virtually all of the country's oil production, though levels are moving closer to the pre-war output of around 1.6 million barrels per day. Without a coordinated national reconciliation effort, however, eastern claims at autonomy could undermine long-term prospects for Libya's oil future.
 
Libyan oil production before civil war erupted last year averaged 1.6 million bpd. By summer 2011, the International Energy Agency called on member states to release oil from their strategic petroleum reserves to offset liquidity concerns sparked by the Libyan war. In January, however, oil production was back above the 1 million bpd mark. By May, the IEA reported that Libyan oil production had reached 1.42 bpd.
 
In its annual outlook, the IEA said Libyan elections could cast a shadow over the international oil market.  Before the weekend election, armed gangs had ransacked election headquarters in the eastern city of Benghazi.  Pro-autonomy groups, meanwhile, had occupied the eastern ports of Brega, Es-Sider and Ras Lanuf, hitting crude oil exports to the tune of 300,000 bpd. Operations at Ras Lanuf were slow to emerge from war as it was, though state oil officials said that, by Monday, all three ports were back in service.  In terms of production, an official at the state-run National Oil Corp. said oil was "technically" back at the 1.6 million bpd mark.
 

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