There is no immediate prospect of removing Libya from a list of areas deemed high risk by London's marine insurance market, and underwriters will seek a stable period in the country before looking at a de-listing, a market official said on Monday.
Libyan government tanks and snipers put up a scattered, last-ditch resistance in Tripoli on Monday, after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Moammar Gadhafi's 42 years in power.
In March, the Joint War Committee (JWC), which groups syndicate members from the Lloyd's Market Association (LMA) and representatives from London's insurance company market, added Libya to a list of area it considered high risk for merchant vessels and prone to war, strikes, terrorism and related perils.
There is no immediate prospect that Libya would be taken off the listed areas if hostilities were declared over, said LMA senior technical executive Neil Roberts.
Every situation is different, but underwriters would certainly be looking for a stable period in the country before considering whether to de-list, he told Reuters.
The London marine insurance market plays an influential role in the global marine insurance industry.
It would be unrealistic to take it off in the short term and the situation would be monitored in respect of enhanced risks to maritime assets, Roberts said, referring to Libya.
Simply being listed does not mean that additional charges will be made automatically, but it does give insurers the chance to assess the risks they are faced with and react accordingly.
The heightened risk of damage to oil tankers and targeted western sanctions on Gadhafi's government have virtually paralysed shipping activity in recent months.
It will probably take some time to remove the sanctions, which, as these things are wont to be, were imposed on Libya writ large, said J.Peter Pham with the Atlantic Council think tank.
However at least in the short term, there will increased activity as the oil majors and others jockey to position themselves to do business with the new powers that be in the country.
TANKER ENQUIRY TO GROW
OPEC member Libya was producing about two percent of global oil output or 1.6 million barrels per day before the war and has reserves to sustain that level of production for 80 years.
Aframax tankers on the Mediterranean route, which transport the majority of Libya's crude oil, normally carry up to 600,000 barrel loads. Average aframax earnings had jumped to nearly $50,000 a day in early March when fighting prompted a scramble by buyers to get cargoes out of Libya.
Earnings then dropped and reached $3,277 a day on Friday as West African crude, shipped in larger tankers, replaced Libyan cargoes.
Staff from Libya's leading foreign oil producer, Italy's Eni, arrived in Libya looking into a restart of oil facilities in the east of the country despite continued fighting in Tripoli in the west.
A resumption of production and exports would be ... negative for Brent prices and positive for shipping. However, expectations are not for a big increase in output in the short term due to likely damage to infrastructure and wells, RS Platou Markets said on Monday.
Tanker brokers said they expected enquiry from Libya to pick up in the coming weeks, although a ship glut would cap gains.
It won't be too long before we start seeing interest for aframaxes, and owners are likely to be okay with voyages to eastern Libya, a shipping source said. It should help rates, although it's unlikely that they are going to soar.
Analysts said risks for commercial shipping would remain, given the potential splits among the rebels and tribal rivalries.
As we have seen these last months, conflict in Libya tends to play out along the coasts and in port cities and, should it come to blows, those ships which will be crowding the docks will be the right in the middle of it, said Pham.