Libya's Oil Production Halves Amid Escalating Political Standoff

Libya's oil production has sharply declined by more than half, with over 700,000 barrels per day taken offline due to an intensifying political standoff between rival factions.

This dramatic drop, confirmed by the National Oil Corporation (NOC), comes as tensions over control of the Central Bank of Libya and oil revenues escalate, jeopardizing a period of relative peace that has lasted four years. The NOC reported that Libya’s average oil output fell to 591,024 barrels on August 28, down from about 1.18 million barrels per day in July, with total losses amounting to 1.5 million barrels worth approximately $120 million over three days.

The current crisis, rooted in the country's east-west political divide, has led to the shutdown of key oil ports in Libya’s Oil Crescent, including Es Sidra, Brega, Zueitina, and Ras Lanuf. These closures have halted exports, significantly impacting the country’s oil sector.

Production at several major oilfields, including those controlled by the Waha Oil Company, has been either reduced or completely halted, contributing to the steep decline in Libya's overall output. Analysts, including those from Rapidan Energy Group, estimate that production losses could reach up to 1 million barrels per day and could persist for weeks.

The impasse began after the Tripoli-based Presidency Council attempted to dismiss Central Bank Governor Sadiq al-Kabir, a move that was rejected by the eastern House of Representatives and forces loyal to military commander Khalifa Haftar. This standoff has now led to a blockade, with eastern factions vowing to maintain it until al-Kabir is reinstated. The situation recalls previous instances where oil blockades were used as political leverage, notably the eight-month halt in 2020 that ended only after Haftar's failed assault on Tripoli. As Libya remains divided between east and west, this latest crisis threatens to further destabilize the nation and its crucial oil industry.