Libyan Oil Production Plummets as Political Crisis Persists

• Libya's crude oil exports have fallen significantly due to a political standoff over the leadership of the country's central bank.
• UN-mediated talks between rival Libyan governments have yet to yield a definitive agreement on the central bank leadership.
• The ongoing political crisis threatens Libya's oil production and exports, leaving the country's oil sector in a precarious position.

Crude oil exports from Libya have further fallen in the past week as UN-mediated talks between the rival governments haven’t resulted yet in a definitive agreement on the leadership of the country’s central bank, the sole guardian of Libyan oil revenues.  

Over the past week, Libya’s crude oil exports have averaged about 314,000 barrels per day (bpd), down from 468,000 bpd of crude shipped in the first five days of September, according to tanker tracking data compiled by Bloomberg. 

The latest crisis in Libya erupted at the end of August.

Part of Libya’s production and exports were halted due to a political standoff over the leadership of the OPEC producer’s central bank.

Oil production at several Libyan oilfields was halted on August 27 after the rival government in the east announced a stop to all oil production and exports from Libya.

Libya, which pumps about 1.2 million bpd of oil, was plunged into a deeper political crisis over the row about the leadership of the Central Bank of Libya, the only internationally recognized depository of Libya’s oil revenues.

The internationally recognized government in the capital city in the west, Tripoli, was trying to replace Sadiq Al-Kabir, the governor of the Central Bank of Libya. This has led to the latest controversy between the Eastern and Western governments and political factions, threatening again to reduce Libya’s oil production and exports.

Last week, Libya’s feuding political factions reached an agreement on the mechanism and timelines for appointing the Central Bank Governor and Board of Directors in consultations hosted by the United Nations Support Mission in Libya (UNSMIL).

The situation, however, remains uncertain.

On Thursday, UNSMIL said that despite two consecutive days of consultations, it “regrets that the two parties have yet to reach a final agreement.” 

This uncertainty leaves Libya’s oil sector in a precarious position, with analysts wary that the ongoing political standoff could prevent a full recovery in crude exports for the foreseeable future.   

By Michael Kern for Oilprice.com

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