Libya has had the full attention of the oil markets all week, with the Haftar clan of the east blocking oil production to gain leverage over a battle to control the Central Bank, which controls the country’s oil revenues. The initial shutdown caused a surge in oil prices that were later tamed by a lower-than-expected draw on U.S. crude stockpiles in the weekly inventory report. By Thursday, Libya’s oil production was losing 700,000 barrels per day, from its 1.2 million bpd 2024 production. Output has also been either stopped or reduced at the Sarir, Abu Attifel, Amal, and Nafoora oilfields. Some forecasts see output losses reaching 1 million bpd, and no one will be able to forecast at this point how long it might take for someone to seize power. (In 2020, Haftar blockaded Libya’s oil for eight months).
Keep an eye on the unfolding Libyan Central Bank scandal, where it remains unclear as to who is controlling the bank right now. Al-Kabir, the governor who is in the middle of a rift with Dbeibah who has attempted to replace him, has not been seen for a couple of days, and some reports have said that Dbeibah’s people have retaken control and found the bank abandoned, but lacked the password keys to the kingdom.
While Libya has been simmering on the back burner as the world turned most of its attention to Israel and Iran, as well as intermittently to Russia-Ukraine, the most recent supply shock in the country has immediately impacted…
Libya has had the full attention of the oil markets all week, with the Haftar clan of the east blocking oil production to gain leverage over a battle to control the Central Bank, which controls the country’s oil revenues. The initial shutdown caused a surge in oil prices that were later tamed by a lower-than-expected draw on U.S. crude stockpiles in the weekly inventory report. By Thursday, Libya’s oil production was losing 700,000 barrels per day, from its 1.2 million bpd 2024 production. Output has also been either stopped or reduced at the Sarir, Abu Attifel, Amal, and Nafoora oilfields. Some forecasts see output losses reaching 1 million bpd, and no one will be able to forecast at this point how long it might take for someone to seize power. (In 2020, Haftar blockaded Libya’s oil for eight months).
Keep an eye on the unfolding Libyan Central Bank scandal, where it remains unclear as to who is controlling the bank right now. Al-Kabir, the governor who is in the middle of a rift with Dbeibah who has attempted to replace him, has not been seen for a couple of days, and some reports have said that Dbeibah’s people have retaken control and found the bank abandoned, but lacked the password keys to the kingdom.
While Libya has been simmering on the back burner as the world turned most of its attention to Israel and Iran, as well as intermittently to Russia-Ukraine, the most recent supply shock in the country has immediately impacted markets, and the situation could yet escalate. The breadth of the conflict will depend on how external actors decide to play this delicate game.
This is a war of two clans: the Haftars (in Benghazi) and the Dbeibahs (in Tripoli). Haftar’s son, Saddam (recently promoted to chief of staff of the LNA) led the shutdown of Libya’s Sharara oilfield (the country’s largest). Right after that, he started deploying his forces westward. Civil war comes next, and that outcome depends a great deal on external forces, though none can stop it from happening now.
A wild kleptocracy has essentially been the watered-down glue holding Libya together for the past year–everyone getting their cut in fuel-smuggling schemes. But this form of “stability” is ephemeral, and a small break in the chain leads to the situation we see now. Haftar maintains the upper hand, having accumulated a great deal of power-buying wealth over the past year.
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