According to analysts and observers of the Middle East, Saudi Arabia will not be able to pick up where the supply of Libyan oil leaves off. A large number of foreign oil companies in Libya have stopped their operations, including production and exploration. Repsol, one of the largest of these firms has halted their activities, including their output from the El Sharara oil field which yields 200,000 barrels/day of export-grade crude oil for the company. Total shortfall for all oil production in the beleaguered country is estimated to be about 1 million barrels/day, a large percentage of the country’s total of 1.6 million barrels/day, the rest under threat.
Despite the fact that some observers suggested that Saudi Arabia could make up the difference by increasing their own oil output, this seems unlikely. Suki Cooper of Barclays Capital explained why Saudi Arabia can’t just step into Libya’s oil producing shoes:
"Firstly, the grades and quality of crude available from Saudi Arabia is likely to be different from Libya.
Moreover, the time taken to bring those Saudi barrels to the market is likely to be significantly longer compared to the ongoing Libyan production. Thus, the concept of a barrel for barrel replacement is not a correct one.
"Ultimately, the overall significance of the situation in Libya is more than just about lost barrels. It continues to inject a huge amount of uncertainty in the oil market especially for the medium term, as destabilization in the Arab world, home to the world’s largest oil and gas reserves and production, is of extreme significance."