Libyan crude oil shipments are set to slide in the coming days as mounting violence, falling oil output, the impact of sanctions and rising freight costs take their toll on Africa's third-largest oil producer.
As fighting continues across Libya, the oil industry is trying to assess the output lost. Most estimates have suggested around half of the country's 1.6 million barrels per day (bpd) of oil capacity is out of action.
But the International Energy Agency said on Friday one million bpd of production was currently shut as foreign oil firms evacuate their workers.
"There has been a massive flight of skilled workers," said Samuel Ciszuk, senior analyst with IHS Energy. "You now have a situation where everything is pointing towards a more or less complete shutdown of Libyan production."
At least 4.4 million barrels of crude sailed from Libyan ports last week on tankers. But shipping sources said the export momentum was fading, adding that a number of shipments had been cancelled in the past few days.
"You are definitely seeing a slowdown in activity," a ship broker said. "At the end of last week deals have been a lot more flaky — it's a combination of nervousness and people taking stock of the various sanctions."
Western countries, the European Union and the United Nations have imposed sanctions on Libya and frozen government assets after forces loyal to leader Muammar Gaddafi fired on protestors.
The Swiss branch of Libyan oil company Tamoil told Reuters last week UN sanctions could affect the group's ability to source crude and that high oil prices had forced it to cut refinery runs.
There were also indications that tankers were leaving Libya without crude onboard. A tanker owned by Iranian tanker company NITC left a Libyan port without a cargo, an NITC spokesman said.
Separately, Danish owner and operator Torm said one its tankers left Libya without loading a cargo. "They were not able to get hold of the cargo," a Torm spokesman said, without giving further details.
Libya's top oil official estimated last week oil output by the world No 12 exporter had fallen to 700,000-750,000 bpd.
Ship brokers and analysts said the amount exported in oil tankers was most likely to have been taken from storage tankers or from existing pipeline supplies.
Sources said the growing costs involved in Libyan oil shipments was also making deals more unattractive, with more buyers seeking alternative crude oil sources including Nigerian or Saudi Arabian stocks.
"When ship owners are quoting Libyan cargoes they double or triple the freight rate due to uncertainties," a second ship broker said.
Tanker rates on the benchmark cross Mediterranean route rocketed up to their highest in more than nine months last week to nearly $50,000 a day before retreating to $41,197 a day on Friday, Baltic Exchange data showed.
Expectation of higher insurance costs is another growing factor, shipping sources said. London's marine insurance market added Libya to a list of areas deemed high risk. "The key thing at the moment is insurance and it's expensive for people to call at Libyan ports," a ship broker said. "The Lloyd's market move is bound to have an impact."