Azerbaijan, Baku, Jan. 31 /Trend, A.Badalova/
Libyan oil production may reach the pre-crisis level at 1.6 million barrels per day (bpd) by the second quarter of 2012, major U.S. investment bank JP Morgan's analysts believe.
Libyan oil production has recovered faster than expected, the analysts said in their report on Economic Research. Crude production increased to 1.3 million bpd in January and could reach the 1.6 million bpd pre-crisis levels by the second quarter of 2012. These dynamics are critical to the country's reconstruction efforts.
According to the Libyan National Oil Company, the country intends to increase oil production up to 1.7 million barrels per day by spring 2012, which exceeds the pre-revolutionary volume.
Libya is the eighth oil producer in terms of oil production among 12 OPEC countries and the third in Africa after Nigeria and Angola. The main importer of Libyan oil is Italy, which is followed by Germany, France and Spain.
Libya's proven oil reserves are 45 billion barrels and before the revolution produced 1.5 million barrels of oil per day. The shortfall in production has largely been accommodated by Saudi Arabia along with Kuwait and UAE, JP Morgan's analysts noted.
'Higher Libyan crude supply will therefore enable the Gulf trio to meet a possible shortfall in Iranian oil exports', the report said.
Last week the European Union formally imposed an oil embargo on Iran and agreed to freeze the assets of the Central Bank of Iran on Monday, but existing contracts will be honoured until July 1.
Europe is a large Iranian oil importer. According to the International Energy Agency's (IEA) figures, the EU states accounted for nearly 600,000 barrels per day (bpd) of Iranian oil purchased in the first nine months of 2011 which is equivalent to around 24 per cent of its market. Greece took 30 per cent of its supplies from Iran in that period, Italy 13 per cent and Spain 12 per cent.
"A self-imposed ban would force the Gulf trio to increase its supply immediately to meet European demand which will ultimately fuel regional tensions," JP Morgan analysts said.
While the possible closure of the Strait of Hormuz still represents a tail event, risks of an escalation of regional tensions have increased, analysts believe.