Brent crude fell to its lowest intraday level in almost three weeks as rebels in eastern Libya said two oil ports, including the country’s biggest, are free to reopen.
Futures declined as much as 0.8% in London to $111.41 a barrel.
The ports of Es Sider and Ras Lanuf are free to resume shipments, said Ali Al-Hasy, spokesman of the self-declared Executive Office of Barqa region.
The restart would expand Libya’s export capacity by 500,000 barrels a day and probably send Brent down to $110, Commerzbank said.
“Most of the big moves in the market we have seen this year have been on the back of news from Libya,” said Jens Naervig Pedersen, an analyst at Danske Bank in Copenhagen.
“The market could be starting to focus more on the potential downside risks to the oil price.”
The Es Sider and Ras Lanuf terminals are “in very good shape” and “ready to operate,” rebel spokesman Al-Hasy said.
Their reopening is intended to welcome Libya’s newly elected parliament, he said. The government has agreed to pay salaries of the Petroleum Facilities Guard members who had defected to the Barqa group during the ports blockade, he added.
Libya’s National Oil Corporation has yet to receive confirmation of an agreement, said spokesman Mohamed Elharari.
“There have frequently been similar announcements without words ever being followed by actual deeds,” Carsten Fritsch, an analyst at Commerzbank in Frankfurt, said in a report.
“Things could be different this time around, in which case the Brent price would probably fall sharply.”
Brent climbed 2.7% in June, the most in 10 months, as fighters from a breakaway al-Qaeda group, now known as the Islamic State, captured the Iraqi northern city of Mosul and advanced south toward Baghdad.
Iraq pumped 2.9million barrels a day of oil last month, making it the second-largest producer in the Organization of Petroleum Exporting Countries (OPEC).