At that time Libya kept official selling prices for its benchmark Es Sider crude stubbornly high, over $5 a barrel more expensive than CPC and close to $4 a barrel above Saharan Blend.
Buyers could not justify lifting the crude and re-selling could only be achieved at unprofitable discounts, up to $1 a barrel below OSPs.
At least one Mediterranean refiner with a large refining system was approached by NOC in June to take additional July cargoes, at a time when traders had to stop as they have no refining assets and ability to absorb unsold barrels.
A month later, buyers find themselves scrambling for Libyan cargoes after the country steeply cut OSPs for August. Some cargoes have been selling at premiums to the OSPs.
"The OSPs make Libyan by far the refiner's choice," said one trader.
Es Sider, was largely sold out only a few days after the August OSP was cut by $1.60 a barrel down to dated Brent minus $1.30. Other grades, including Libya's prized El-Sharara, were chopped by over two dollars.
A sharp correction was expected after NOC organised meetings in Istanbul in June with some of its lifters like Total, BP, BB Energy, ConocoPhillips and Saras to discuss the non-lifting.
"They should have lowered the OSPs months ago," said another trader. Sellers are expected to push up prices and test refiners' tolerance, but also to remain attuned to the market, he added.
NOC is expected to increase September OSPs in line with recovering sweet grades but a return to consistently over-reaching levels is not anticipated, several sources said.
"July was too high and August is too cheap," said a third trader.
(Source: Business Live)