Libya is now reportedly producing 300,000 bpd of crude oil, although the NOC has been silent on numbers since September 24th. The million-dollar question of the week for the crude oil glut is what the arrest of the former CEO of Libyan Foreign Bank might mean for Libyan oil production at a time when the market really doesn't want it.
Four ports are still closed, including Zawiya, and that means oil still isn't being exported from Libya's largest field, Al-Sharara.
That the CEO of Libyan Foreign Bank, Mohamed bin Youssef, was arrested isn't in and of itself surprising. In 2018, the Libyan Central Bank (which owns the Foreign Bank) fired Yousseff for the same reason he was arrested: fraud. But the timing of the arrest is important.
Recall that General Haftar had been pushing for a UN audit of the Central Bank, alleging that oil revenues were being used to fund militias backing the Government of National Accord (GNA) in Tripoli. The problem for Haftar was always that he controlled the oil but not the oil revenues.
So now, as Haftar is allowing the re-opening of Libyan ports and the resumption of Libyan crude oil exports, the next struggle will be over oil revenues funneled through the Central Bank. This is a power struggle that cannot be underestimated. And while Haftar is opening the taps, it's a gradual restart and he can pull the plug anytime again if there is no agreement on the distribution of oil revenues that suits him.
Against that backdrop,…
Libya is now reportedly producing 300,000 bpd of crude oil, although the NOC has been silent on numbers since September 24th. The million-dollar question of the week for the crude oil glut is what the arrest of the former CEO of Libyan Foreign Bank might mean for Libyan oil production at a time when the market really doesn't want it.
Four ports are still closed, including Zawiya, and that means oil still isn't being exported from Libya's largest field, Al-Sharara.
That the CEO of Libyan Foreign Bank, Mohamed bin Youssef, was arrested isn't in and of itself surprising. In 2018, the Libyan Central Bank (which owns the Foreign Bank) fired Yousseff for the same reason he was arrested: fraud. But the timing of the arrest is important.
Recall that General Haftar had been pushing for a UN audit of the Central Bank, alleging that oil revenues were being used to fund militias backing the Government of National Accord (GNA) in Tripoli. The problem for Haftar was always that he controlled the oil but not the oil revenues.
So now, as Haftar is allowing the re-opening of Libyan ports and the resumption of Libyan crude oil exports, the next struggle will be over oil revenues funneled through the Central Bank. This is a power struggle that cannot be underestimated. And while Haftar is opening the taps, it's a gradual restart and he can pull the plug anytime again if there is no agreement on the distribution of oil revenues that suits him.
Against that backdrop, it is interesting to re-evaluate the "cooperation" deal that Turkey (which backs the GNA against Haftar) struck on August 31st with the Libyan Central Bank - a deal that was much celebrated in Ankara.
The power struggle now concerns Interior Minister Fathi Bashagha (a Turkish pawn), Central Bank chief Sadiq al-Kabir (a Muslim Brotherhood supporter and a Turkish ally), and Prime Minister Fayez al-Sarraj (also a Turkish ally until recently). The Turks have been plotting a coup against Sarraj in order to pass more power to his rival, Bashagha. Hence Sarraj's recent announcement that he would step down in October. Prior to this, Sarraj, seeing that the Turks were attempting to push him out in favor of Bashagha, had the interior minister suspended but was forced to reinstate him almost immediately. So, why are the Turks suddenly moving against Sarraj and trying to empower Bashagha? Two reasons: First, because Sarraj didn't give Ankara the one thing that it wanted: Naval bases in Misrata, Tripoli, and two other locations; but more importantly, because Turkey was losing the battle after Haftar-ally Egypt stepped in in Sirte, the gateway to Libya's oil.
But no one has full control here. What happens next at the top of the Central Bank and with respect to the PM's seat will tell us whether oil production is going to be sustainable, or more conflict is in store.
The bottom line is that the GNA is a fragile beast, at best, and the fractions within have their claws out for power. And Bashagha and Kabir aren't the only Turkish allies vying for control of the GNA. High Council of State VP Ahmed Maiteeq, another Turkish ally, is also a key figure in the power struggle, and he's also got Moscow's ear. Maiteeq is the one who cut the deal with Haftar to end the oil blockade, and that did not have the backing of Sarraj, who is now stepping down. The Council's head, Khaled al-Mishri, also has both Turkish and Russian allegiances. In other words, the next GNA leadership is a battle between Russian and Turkish influence. Al-MIshri was opposed to the deal Maiteeq cut with Haftar.
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