Libya’s oil promises amid Gaddafi defections

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Libyan rebels certain of victory over Muammar Gaddafi and his forces have promised to begin exporting oil in less than a week. The rebel representative assured the international community that the uprising would not further slow-down oil production.

Libya produces just 2 percent of the world’s oil supply, but it is some of the world’s most sought-after highest quality crude. It exports 85 percent of its oil to Europe and only 5 percent to the U.S. There were concerns over oil production following Gaddafi’s defiance and unrest in Libya.

“We are producing about 100,000 to 130,000 barrels a day, we can easily up that to about 300,000 a day,” Ali Tarhoni, the rebel representative responsible for economy, finance and oil, told a news conference.

The assertive statement comes as rebel forces advance their course, close-in on Gaddafi strongholds and increase their power as NATO took full command of military operations in Libya.

“Gaddafi’s forces are now scared rats. They are dropping their weapons and uniforms and dressing as civilians. We are no longer concerned about Gaddafi’s forces at all,” Mohammed Ali el-Atwish, a bearded 42-year-old fighter, told AFP.

Pressed by Western powers, notably the United States and Italy, to take the helm as swiftly as possible, ambassadors from the 28-nation alliance approved the transfer after overcoming French and Turkish concerns. Foreign ministers from more than 35 countries have so far confirmed they will attend a London conference to discuss coalition military action against Libya.

“Our goal is to protect civilians and civilian-populated areas under threat of attack from the Gaddafi regime. NATO will implement all aspects of the UN resolution. Nothing more, nothing less,” said NATO Secretary General Anders Fogh Rasmussen.

According to reports, many Libyan diplomats and military leaders are defecting, US Secretary of State Hillary Clinton said on the eighth day of the coalition operation.

“We have a lot of diplomats and military leaders in Libya who are flipping, changing sides, defecting,” U.S Secretary of State Hillary Clinton told CBS television.

Oil prices have soared to the highest level in more than two years as Libyan leader Muammar Gaddafi clings to power despite massive protests in the oil-rich country.

Experts say when Libya stops oil production altogether, importing countries have a minimum stock to be able to straddle a temporary production breakdown. The situation will become serious if the crisis begins to affect oil production in neighboring Algeria.

The worst case scenario is if Saudi Arabia, the world leader in oil production, were to be drawn into the wave of political unrest. This could make the oil crisis of the 1970s look like minor events.

Regardless of whether Gaddafi’s regime is still in place or not, and any government after him will be interested in selling oil which is an important source of income for the Libyan state. What could be much more dangerous for the markets is an unstable and violent transition period, between the end of the autocratic regime and the establishment of democracy, with insecurity in Tripoli and in [oil] producing regions, and with foreign experts leaving and difficulties arising in maintaining the production system.

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