Libya's port blockade is set to keep the North African country's oil off the market until at least the fourth quarter of 2020, which, as devastating as it will be for Libyan oil revenues, could help reduce the expected global production glut by 65 percent, Rystad Energy said on Friday.

Currently, oil production in Libya is around 100,000 barrels per day (bpd). This figure is dramatically down from 1.2 million bpd at the start of the year, just before paramilitary formations affiliated with the Libyan National Army (LNA) of eastern Libyan strongman General Khalifa Haftar occupied Libya's oil export terminals and oilfields.

With Libya's conflict escalating, the country's crude oil exports are expected to be just 1.2 million barrels in August, a 40-percent plunge from July.With no immediate return of Libyan oil on the market, the expected global production surplus later this year could be just 58.6 million barrels or about one-third of Rystad Energy's previous forecast.

Even if Libya resumes most of its production soon, in the most optimistic scenario by Rystad, Libya's 2020 exit production rate will be between 700,000 bpd and 800,000 bpd. The country, however, will need another up to four months to ramp the production up to 1 million bpd.

NOC's chairman Mustafa Sanalla has recently said that "The illegal oil blockade has had disastrous effects on our national economy and damaged the living standards of Libyans. Our reservoirs are suffering permanent damage, and stagnant fluids are corroding our pipelines, which will cost us huge amounts to repair."

According to Bjornar Tonhaugen, Rystad Energy's Head of Oil Markets, Libya will inadvertently help reduce the production surplus on the global oil market.

"Our latest global liquids balances report still suggests there will be a shift towards a surplus from August and for the ensuing three months, but it is less precarious than previously estimated and developments in Libya have a lot to do with this revision," Tonhaugen said.