At Least Half of Libyan Oil Production Shut Down
The Financial Times is reporting that half or more of Libya's oil production has been shut down due to the unrest in the country. That's one reason the price of a barrel of Brent crude broke $110, a two-and-a-half year peak.
In recent times, Libya has exported the vast majority of the 1.6 million barrels of oil a day it produces, according to an International Energy Agency report. The biggest importers of the country's oil are Italy, China, France, Germany and Spain. Interestingly, U.S. imports of Libyan oil have fallen from 122,000 barrels a day in 2007 to just 51,000 barrels a day in 2010. Over that same time span, French and British imports have nearly doubled. Libya has the largest proven oil reserves in Africa.
To give you some perspective, U.S. oil consumption is over 20,000,000 barrels a day. Given Libya's relatively small contribution to the global oil supply, the turmoil in the energy and stock markets resulting from Libyan unrest lets you know how little slack there is in the oil market. As long as we use as much oil as we do, there's no way to avoid vulnerability to price spikes for geological or geopolitical reasons. It's a hidden cost of oil and one that we tend to forget any time the price of crude goes down.
For more information on Libya's role in the world energy economy, check out our chart of the top Libyan oil importers, and read Uri Friedman's FAQ on what Libyan unrest means for global oil prices.