Brent oil price opens near $111 a barrel, Libya supply in focus

Brent oil price opens near $111 a barrel as questions over the futures of Libya’s oil supply and government remain, whilst analysts say it will take about a year for Libya to return to full oil production, but many uncertainties remain.

Latest Brent Oil Price

In London, Brent crude oil futures for December 2011 delivery was trading at $110.69, 07.40 GMT this morning on the ICE Futures Exchange.

Libya Oil Supplies

Enormous oil wealth lies thousands of feet below Libya, but whether it will be claimed, and by whom, now that Moammar Gadhafi is gone is very much an open question.

Drilling and shipping equipment has been damaged in the Libyan civil war, land mines must be cleared around oil fields, and a legal framework for how oil money is collected and distributed must still be worked out.

Whatever government is formed could open vast regions of Libya for drilling at reasonable terms, or it could demand that foreign oil companies pay exorbitant royalties or require them to build infrastructure in exchange for access to oil.

OPEC sees member Libya restoring production to one million barrels per day within six months, then attaining pre-conflict levels by the end of 2012, but analysts at Barclays warned that serious security challenges persist in Libya that could hinder efforts to restore Libyan production fully.

Around 85 percent of Libyan output is exported to Europe, and its disappearance contributed to the surge in the Brent crude oil price spread, in comparison to New York traded WTI.

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Brent oil price opens near $111 a barrel, Libya supply in focus