Western powers welcome return of Libyan oil

July 12 (UPI) -- Western powers on Thursday welcomed the return of authority over oil exports in Libya to the U.N-backed National Oil Corp.

The NOC announced Wednesday it lifted a suspension of loading at four oil terminals after control was returned from the Libyan National Army, which seized the facilities in violation of U.N. Security Council resolutions.

NOC Chairman Mustafa Sanalla said Thursday the company and its subsidiaries were concentrating on returning Libyan oil production to its maximum potential and recovering from the losses of four weeks of conflict.

In a joint statement, the governments of France, Italy, the United Kingdom and the United States said Thursday they commended the positive step on authority in the Libyan oil belt.

"We commend the legitimate National Oil Corporation as it repairs infrastructure, honors its contractual obligations, and, having lifted the state of emergency provisions in eastern Libya, restores oil exports and production critical to Libya's prosperity," the statement read. "We also appreciate the LNA's contributions to restore stability in Libya's oil sector, which is critical to Libya's national interest."

The Western allies played a role in NATO-led operations in Libya during the country's civil war in 2011. The same allies are party to the International Energy Agency, which responded to the 2011 conflict with calls to release oil from strategic reserves to buffer against Libya's potential collapse.

Libya is a member of the Organization of Petroleum Exporting Countries. Secondary sources reporting to OPEC economists put Libyan oil production in June at an average of 708,000 barrels per day, down from the first quarter average of 991,000 barrels per day.

Libyan security risks in the oil-producing regions were supportive of the price of oil. Wednesday's announcement that authority was returned to the NOC pushed the price for Brent crude oil, the global benchmark, down 6 percent.

Nicholas Fitzroy, an analyst on Libya at the Economist Intelligence Unit, said in an emailed statement the return to order was a positive step for Libya's economy.

"Nevertheless, supply bottlenecks and damage to storage tankers at the Ras Land terminal means that national oil production is unlikely to come close to reaching the highs of over 1 million barrels per day set earlier in the year, for a number of months," he said.