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Despite political volatility, price of oil remains stable

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Last week’s report that Libyan oil exports began again after an eight-month standoff offset news earlier in the week that Russian President Vladimir Putin is threatening to shutdown oil and gas pipelines out of the Ukraine.

The reports from a Cairo news source, Asharq-Awsat said that a tanker, the Aegean Dignity, arrived at the Hariga port in the country’s eastern region on Tuesday, according to a statement by Salah Al-Monghi, the head of the Management Committee at the Arabian Gulf Oil Company, a subsidiary of Libya’s state-owned National Oil Corporation.

The agreement breaks a standoff between the rebels who took over the ports last year, and the central government in Tripoli. Libya’s economy is predominately fueled by its oil sector, a fact that makes them very susceptible to overthrow attempts. Any disruption toward shipping, pipelines or cargo can be destabilizing.

According to the Al-Awsat report, “Libya’s oil production fell from 1.4 million barrels per day (BPD) before the rebel takeover last fall to 150,000 BPD currently, according to official government figures. The country’s oil ministry said oil exports receipts fell from 12 billion Libyan dinars (9.7 billion US dollars) to 3 billion dinars (2.4 billion dollars) year-on-year during the first quarter of 2014.”

Meanwhile Vladimir Putin has threatened to shut down pipelines in the Ukraine, based on an extended delay of payment to the Russian energy company, Gazprom. Putin went on to say that Russia has given Ukraine various ‘privileges and discounts’ in recent years. According to Putin, Russia’s amicable nature has ‘saved Ukraine $17 billion since 2009’, while the country has failed to pay various fines totaling $18.4 billion.

Despite ongoing political instability in oil-rich regions like Nigeria, Venezuela, and Syria, the price of a barrel of crude oil has stayed within a tight margin of $90 - $100. This is a big difference from the drastic fluctuations it took during the financial collapse. From July of 07’ to February of 09’ the price for a barrel of crude went as high as $138 before dipping to as low as $41.

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