As Moamar Gaddafi flees towards his twilight, the Libyan strongman has left his country in a state of turmoil, yet unlike other war ravaged countries, Libya has tremendous potential in oil wealth. Between 2006 and 2010 Libya was producing on average 1,789.155 to 1,809.577 barrels a day. Of course this output has been halted due to the war. But when oil production resumes it will help lower the price of oil especial Brent crude. In the past most of the Libyan oil was sold to Europe. With Europe taking a front and center role in the war, there is no surprise that they will and probably already have struck deal with the rebels. The question is how long it will take for oil production to reach pre-war levels.
“It will not be easy to start again at the same level,” Shokri Ghanem told Reuters Monday. “I think it will take a few months to come back to production, but to come back to the level of production that we used to produce it will take some time, maybe a year and a half.”
The real challenge will be to establish an emergency government to restore some sens of order to Libya. “They will probably enter a democratic process, but it will take a long time because they are not really prepared. They had no experience over the last 40 years with any type of parliamentarianism or democracy,” said Martin Hvidt, who derves as a Middle East analyst at the University Of Southern Denmark. “The danger would be that you would have an extended period when it is not clear who will be in charge.”
If that is the case it could take longer for the oil to come back on line causing an economically precarious situation in Europe to get that much more shaky.