Libya is set to resume oil production on Thursday, bringing hundreds of thousands of barrels per day back to global markets after resolving a political standoff, Bloomberg reported.
Libya’s eastern government had halted all oil production and exports following a dispute over control of the central bank, which manages billions of dollars in energy revenue.
The eastern government, which had initially ordered the shutdown, has lifted the force majeure, allowing all oil fields and export terminals to reopen, according to a statement on its official Facebook page.
Libya’s largest oil field, Sharara, which produces 260,000 barrels per day, is set to resume operations on Thursday after being shut down amid a political feud in late August, according to Oil Minister Khalifa Abul Sadeq.
Libya, typically producing over 1.2 million barrels per day, saw output plummet to less than 450,000 barrels in August after the UN-recognized western government dismissed the central bank governor.
On September 26, representatives from Libya’s rival administrations reached an agreement to appoint Naji Issa as the new governor, effectively resolving a deadlock that had significant implications for control over billions of dollars in energy revenue.
The resumption of Libyan oil production is expected to exert additional downward pressure on crude prices, which have recently climbed to nearly $75 a barrel due to escalating tensions in the Middle East.
Despite a 2020 United Nations-backed ceasefire intended to end hostilities, deep-rooted political divisions between Libya’s east and west have continued to trigger clashes and blockades, often targeting the country’s most valuable asset—its oil.
The history of political instability in the country raises concerns about the longevity and effectiveness of this latest arrangement, as conflicting interests and power struggles continue to threaten the fragile unity between the rival administrations.
