News that the endgame is beginning in Libya has sent oil falling, as this raised expectations that exports from the OPEC member could resume soon.
The six-month civil war is drawing to an end with hundreds of rebel fighters pushing into the centre of the Libyan capital, Tripoli, late on Sunday.
Brent crude dropped nearly $3 to $105.67 a barrel Monday morning, a fall of 2.6%, while US crude was down 76 cents at $81.50, a drop of 0.9%. Analysts believe Libya could be pumping up to 1m barrels a day again within months.
Before the war halted exports, Libya was pumping some 1.6m barrels a day, accounting for nearly 2% of global supply. Most of it flowed to European refiners, and tightening supply after Libyan exports stopped in the spring drove Brent crude to a two-year high of $127.02 in April.
Jonathan Barratt, managing director at Commodity Broking Services in Sydney told Reuters: "You willl see a relaxation in the supply of crude to the region as a result of what is happening in Libya."
