Geopolitical events happening around the globe can often have both direct and indirect impacts on many industries and supply chains. Recent events in Libya, and their disruptive impact on crude oil production, are one example of this.
Using Ursa inventory data, we can confirm the events happening in the Libyan region and understand exactly how crude inventory levels change as a result of production disruptions. The chart below shows some of this inventory volatility that has recently resulted from these erratic production disruptions:
Above, you can see two instances since mid ’17 when Libya experienced significant drops in inventory levels, both due to major production disruptions.
Blockade at Pipeline - Zawiya, Libya
One of the major declines in inventory levels took place around mid-Sep ‘17. Libya’s largest oil field was shut down due to a blockade in the Sharara-Zawiya pipeline resulting from armed protests (red line, image below). Given the massive production capacity of the Sharara oilfield, inventories dropped drastically two weeks afterwards (orange line) largely at the Zawiya site, which is the destination terminal of the pipeline.
Pipeline Attack - As Sidr, Libya
More recently, we can see another inventory decline taking place in mid-Jan ‘18. This drop in inventory levels is attributed to an attack involving armed men damaging a pipeline that was transporting crude oil to the As Sidr port. Below we can see the aftermath of this pipeline attack on inventory levels at As Sidr, again highlighting this two week lag in inventory declines (purple line) from the onset of the production obstruction.
To recap: in these instances where Libyan production was halted, the two-week lags indicate that from the day of the disruption, inventory levels decline about two weeks afterwards and recover soon after.
These inventory declines are typically indicative of future lower exports for a short time, but upon maintenance of the problem, inventories and exports recover soon after.
Using Ursa inventory data, we can make predictions as to the timeline of lower exports that come from production disruptions and confirm assumptions about the effect of these disruptions on supply levels. Supply disruptions happen all over the globe, not just in the Middle East. Use inventory data to predict disruptive impacts.
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