Libya’s eastern government has announced it will halt all oil production and exports following an attempt by its rival, based in Tripoli, to replace the central bank’s leadership.
The eastern authorities said the “force majeure” applies to all oil fields, terminals, and facilities, Bloomberg reported. The Benghazi government is not internationally recognised but controls most of Libya’s oilfields.
As a result, Brent crude prices surged by as much as 2.2%, rising above $80 per barrel.
A dispute over control of the central bank, which manages billions of dollars in energy revenue, has been escalating for over a week, further deepening political divisions and jeopardizing a UN-brokered peace agreement.
The internationally recognized government in the West has been attempting to oust Governor Sadiq Al-Kabir, who has resisted stepping down. Today, a government delegation reportedly entered the bank’s offices to assume control, according to local media reports.
However, production has since taken a hit, with the Sharara oil field—the country’s largest, pumping nearly 270,000 barrels daily—coming to a halt. The eastern region, which houses the Sirte basin, is home to most of Libya’s oil reserves and four major export terminals.
Analysts at Citigroup Inc. suggested in a note on Monday that a drop in exports could temporarily push Brent crude prices into the mid-$80s per barrel.
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.
Libya, home to Africa’s largest known crude reserves, has seen production suffer over the past decade due to ongoing political turmoil.
Now, the central bank has become the latest flashpoint in the power struggle that has plagued Libya since the 2011 NATO-backed uprising that ousted long-time ruler Moammar Al Qaddafi.
The nation remains divided between rival governments in the east and west, each vying for control of its institutions.
