Libya's oil company warns Sharara could halt if pipeline stays shut into a second week

The National Oil Corporation says it will stop production and exports at the field entirely if the Zawiya pipeline closure runs on, as Sharara's output has already fallen to about 127,000 barrels a day.

Libya's National Oil Corporation has warned that it will halt production and exports at the Sharara oil field entirely if a pipeline closure runs into a second week without resolution. Sharara is one of the country's largest fields. Its output has already fallen by more than half, to about 127,000 barrels a day.

The corporation said an armed group shut a valve on the pipeline to the Zawiya export terminal, which caused the drop. Most of the field's crude is now being redirected to the port of Mellitah instead.

Saudi Arabia has increased observed crude loadings from the Persian Gulf over the same period. The moves come as traders track two other developments. In the Gulf, Iran's Revolutionary Guard has threatened a wider war if the United States escalates, with U.S. and Iranian officials due to hold talks in New York this week. Separately, U.S. and Chinese officials held a second day of trade talks in New York, focused on artificial intelligence and investment, ahead of a Trump-Xi summit set for September 24 in Washington.

Saudi Arabia's higher loadings and the loss of Libyan barrels are pulling supply in opposite directions at the same time. Neither is large enough on its own to settle where prices go next. A full shutdown at Sharara would take out more barrels still, if the corporation carries out its warning. With Iran tensions unresolved and the U.S.-China trade talks still running, traders are waiting on the outcome of the Trump-Xi meeting and any progress with Iran. Those will decide whether tighter supply or demand concerns end up setting the price.