Dubai: Libya joined the Organisation of Petroleum Exporting Countries (Opec) in 1962 and is one of the main contributors to the organisation's oil output. Concerns about a shortage of oil delivered from Libya due to the country's turmoil has led to oil prices spiralling over the last week, causing Opec to pledge it will step in to secure supply.
Saudi Arabia has already taken the first step by raising its output.
The Executive Director of the International Energy Agency (IEA), Nobuo Tanaka, said last week that Opec would act first to fill any gap from member Libya with its own cushion of spare output capacity. Only after that would the IEA contribute if needed.
"With the IEA stocks, we can produce 2 million barrels per day for two years but these are stocks and once we use them, they will run out, unlike spare capacity," Tanaka said. "That's why the stocks are for great emergencies." He added that "if the Opec steps in with an extra one million barrels, then the gap is covered."
Opec has around 5 million barrels per day of spare output capacity, mostly held by Saudi Arabia, against Libya's production of roughly 1.5 million barrels per day.
Libya was always considered to be one of the Opec hardliners, along with Algeria, Venezuela and Iran. Libya would even have accepted an oil price above $400, provided that the Opec members would agree on it, according to statements by former Opec president Chakib Khelil in 2008.
During the second oil crisis in 1979 following the Iranian revolution, the price of oil rose from $15.50 to $24 per barrel, but Libya together with Algeria and Iraq demanded $30. In 1980, at the climax of the Opec's high price policy, Libya demanded $41 per barrel compared to $32 for Saudi oil and $36 for other Opec crudes.
Libya has been chosen to host the Opec summit in 2012 at the organisation's last meeting in Riyadh, according to Libya's top oil official Shukri Ganem. It is unclear if the country would be able to do so under current conditions.
