In the heart of Libya, a significant clash over money management and oil riches has slashed the country’s oil production by more than half, stirring up fears of a prolonged turmoil that could disrupt global energy flows. Last Thursday, it was reported that around 700,000 barrels of oil per day were not extracted, which is a stark drop from the 1.18 million barrels produced daily in July.
This sudden plunge in oil production came as Libya’s two opposing leadership factions locked horns over the control of the nation’s Central Bank. The dispute has thrown a wrench into the operations at major ports along the Oil Crescent, a crucial region rich in hydrocarbons. On that day, no oil shipments left ports like Es Sidra, Brega, Zueitina, and Ras Lanuf, as confirmed by two engineers at these locations.
The conflict stems from a controversial decision made on August 18 by the Presidency Council, the body in charge of Libya’s western region, to dismiss the veteran Central Bank governor, Sadiq al-Kabir. This move was immediately contested by the eastern faction, which includes the House of Representatives and the military force led by commander Khalifa Haftar, known as the Libyan National Army. They have responded by vowing to halt oil production until al-Kabir is reinstated.
This standstill is not just about internal politics but also affects the global oil market. The National Oil Corporation (NOC) highlighted that the past three days alone saw a loss of over 1.5 million barrels, valued around $120 million. The shutdowns also extend to significant oil fields like Sharara and Sarir, further cutting down Libya’s oil output.
The strife threatens to undo the relative peace enjoyed since 2020 and harks back to the instability following the 2011 fall of Muammar Gaddafi, which left the country divided and frequently in conflict. Oil fields and ports often become chess pieces in Libya’s political battles, used by factions to leverage power and negotiate terms.
Experts from the consulting firm Rapidan Energy Group predict this disruption could lead to a loss of up to 1 million barrels per day, potentially dragging on for several weeks. This ongoing crisis serves as a reminder of the fragility of peace in Libya and the broad impact of its internal conflicts on the international stage.
Source: Reuters
