A lack of letters of credit (L/Cs) for Libyan oil exports is amongst reasons why Opec producers are mulling making more oil available to world markets.

For the moment, however, Opec is holding back from releasing extra oil supplies to compensate for supply shortages and high prices caused by disruptions in Libyan production.

Libyan shortages

There are several reasons why oil flows from Libya are drying up.

An executive at a European company that produces and trades Libyan oil has told media that his firm could no longer sell its output because Libya's banks are unable to provide L/Cs.

Other oil companies are simply ceasing to produce oil in Libya. European firms withdrawing staff from Libya include Germany's Wintershall, Spain's Repsol and Eni of Italy.

No shortage yet

Despite the disruptions in Libya, oil producing and consumer nations meeting in Riyadh concluded that the world was not yet short of oil.

Meanwhile, Saudi Arabia and the UAE have said they were prepared to increase production if needed to keep oil available in the market and prevent prices from spiralling.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.