Daily Update: March 21, 2024

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

The Status of Libya's Oil Production and Distribution

Libya's oil industry, a key driver of its economy, faced a series of disruptions in recent months due to protests over economic conditions and salary disputes. Protests over high fuel prices and a lack of economic opportunity in the southern Ubari region led the country's largest oil field, Sharara, and the nearby El-Feel field to shut down.

In addition to these protests, the Petroleum Facilities Guard, tasked with protecting Libya's oil and gas infrastructure, coordinated a shutdown of the Wafa oil field and the Greenstream pipeline, which exports natural gas to Italy. The group's actions, driven by a dispute over salary payments, affected oil and natural gas production. The al-Zawiyah terminal, part of the Greenstream pipeline, and the Misrata oil storage depot were also closed, raising the specter of a potential fuel crisis in western Libya if the outage persists. 

The disruptions had the potential to impact markets beyond Libya; the country's National Oil Corp. (NOC) declared force majeure in early January on the Sharara field, which could have affected Mediterranean light sweet crude complex pricing and boosted the values of Azerbaijan's Azeri Light, Algeria's Saharan Blend and Kazakhstan's CPC Blend.

After a two-week shutdown, Libya's NOC lifted the force majeure Jan. 21 on the Sharara oil field, operated by a joint venture between NOC, Equinor, OMV, Repsol and TotalEnergies, and restarted production following negotiations. This development, along with international oil companies lifting force majeures and returning to Libya following a period of renewed stability, signals a potential revival of Libya's oil sector.

While Libya's oil industry has faced significant challenges, recent developments suggest a potential path to recovery. However, political instability and the ongoing potential for further disruptions mean that the situation remains precarious. As such, the future of Libya's oil industry will likely depend on the country's ability to maintain stability and address economic grievances.

Today is Thursday, March 21, 2024, and here is today's essential intelligence.

Written by Wyatt Scott.

Economy

Consumer Checkup: Inflation, Interest Rates Threaten Spending As Confidence Lags

The Federal Reserve's efforts to fight inflation through higher interest rates have left US consumers disgruntled with their finances and spending power. While the latest inflation reading is far below its most recent peak, rising prices were the greatest threat to consumers' personal finances, according to S&P Global Market Intelligence survey data released in February. Energy and healthcare costs, along with elevated interest rates, are also among consumers' top concerns.

—Read the article from S&P Global Market Intelligence

Access more insights on the global economy >

Capital Markets

Your Three Minutes In Banking: European Banks' Earnings Top Equity Costs, For Now

Record aggregate profits in 2023 will mean most European banks can (at last) cover their cost of equity, helping them to boost equity valuations. That could prove fleeting if interest rate support fades. Some domestic European commercial banks may struggle, in 2024, to clear cost of equity hurdles that can vary from 6.2% to 12.3%, according to S&P Global Ratings' estimates.

—Read the article from S&P Global Ratings

Access more insights on capital markets >

Global Trade

Singapore's LSFO Downstream Premiums Capped, Competition To Intensify In March

Lackluster downstream low sulfur fuel oil demand in Singapore — the world's largest bunkering hub — has persistently pressured delivered premiums amid competition, but is likely to stiffen in the near term, gradually narrowing suppliers' margins, traders said March 19. Despite the bleak downstream outlook for the rest of March, traders anticipate that stronger demand in April could lift Singapore's delivered premiums, but competition from China's Zhoushan hub might limit significant upsides.

—Read the article from S&P Global Commodity Insights

Access more insights on global trade >

Sustainability

Listen: Deconstructing The European Carbon Market's Price Slump

The price of emissions in the world’s largest compliance carbon market — the EU’s Emissions Trading System — has fallen sharply so far in 2024, driven by economic uncertainty, weaker industrial activity and lower gas prices. S&P Global Commodity Insights' experts Eklavya Gupte, Coralie Laurencin, Michael Testa and Scott Chen discuss the reasons behind this decline, the outlook for EU ETS prices and what this slump could mean for short- and long-term climate and energy policy.

—Listen and subscribe to Future Energy, a podcast from S&P Global Commodity Insights

Access more insights on sustainability >

Energy & Commodities

China's Yunnan Struggles With Power Supply, Stokes Fear Among Aluminum Sector

An expected power supply shortage in China's Yunnan province in 2024 could slow down primary aluminum capacity transfer to the region, an industry trend that had strengthened over the past few years due to the province's clean energy capabilities, and is now facing a pushback amid rising power supply issues. Yunnan is rich in hydropower generation but would be facing tight electricity supply in 2024, with the power shortage expected to reach 27 billion KWh, a latest report from state-backed Kunming Power Exchange Center said.

—Read the article from S&P Global Commodity Insights

Access more insights on energy and commodities >

Technology & Media

Listen: AI Is Changing The Energy System, Putting Premium On Flexibility

This week, Energy Evolution reports from CERAWeek, S&P Global's flagship energy conference. Our first conversation from the “Super Bowl of energy” is with Arshad Mansoor, president of the Electric Power Research Institute. With AI changing the energy landscape at lightning speed, grid flexibility is increasingly indispensable, Mansoor tells podcast co-host Taylor Kuykendall. Given that, innovation and deployment of small modular reactors and hydrogen cannot come fast enough, Mansoor says.

—Listen and subscribe to Energy Evolution, a podcast from S&P Global Commodity Insights

Access more insights on technology and media >