Date Published:
02/22/2011 Libya produces about 2% of the world’s oil, but has very large reserves. As turmoil in Libya affects the oilfields, and foreign firms rightly evacuate their nationals, oil production is slowing or stopping.
While the global economy is not yet “at full capacity” and there is some room to accommodate Libyan reductions in the short term, if the Libyan situation becomes protracted, or spreads further to other oil-producing states which are also notably autocratic, then the situation may become much more dramatic.
A first indicator would be rising prices, indicating some combination of uncertainty and supply shortages.
Risk Management Perspective:
- If Oil production becomes jeopardized, either or both of supply shortages or prices increases could imperil a global recovery that is still a somewhat fragile. Does this hold risks for you?
- If the Arab “awakening” spreads further to other middle east jurisdictions, is that likelier to hold more severe oil/energy related risks? How will that affect you?
- There are extreme political risks at play here. It is not clear what regimes will be in charge in 12 month’s time.
- As recently as a few months ago, a major Canadian oil producer singled out Libya as “a great place” to bring oil to market.
Industry Group:
Other
Industry:
Other
Country:
Rest of World
Risk Class:
Strategic
Risk Type:
Political
Risk Type:
Riots/Demonstrations