Libya’s eastern government has announced plans to shut down crude oil production and exports, escalating tensions in its ongoing power struggle with the rival Tripoli-based government over control of the central bank and the nation’s oil wealth. This move threatens to ignite a new round of conflict in the already divided country.
Brent crude prices surged by as much as 3.2% to over $81 a barrel following the eastern authorities’ declaration on Monday that a “force majeure” applies to all oil fields, terminals, and facilities. Waha Oil Co., which supplies Libya’s largest export terminal, Es Sider, announced that it will begin reducing shipments gradually, while Sirte Oil Co. also confirmed plans to cut output.
Libya, sitting atop Africa’s largest known crude reserves, has been plagued by political strife since the 2011 overthrow of longtime dictator Moammar Al Qaddafi. Despite a 2020 UN-backed ceasefire aimed at ending the fighting, deep-seated divisions between the eastern and western regions continue to result in battles and blockades targeting the country’s most valuable resource: oil.
The latest conflict centers around control of the central bank, which manages billions of dollars in energy revenues. The Tripoli-based government has sought to replace Governor Sadiq Al-Kabir, who has refused to step down, arguing that the Presidential Council lacks the authority to remove him. Al-Kabir, who has held the post since 2011 and is backed by the eastern legislature, is accused of mishandling oil revenues.
Relations between Al-Kabir and Tripoli-based Prime Minister Abdul Hamid Dbeibah have steadily worsened, with the central banker publicly accusing Dbeibah of corruption and overspending—allegations the prime minister has strongly denied. On Monday, Dbeibah’s government insisted that oil fields should not be shut down “under any false pretenses.”
The central bank standoff is part of a broader deterioration in Libya’s political, military, and security situation. The UN’s top official in Libya, Stephanie Koury, warned the Security Council on August 20 that the situation has “deteriorated quite rapidly” in recent months, following the mobilization of armed groups in July and August.
The eastern legislature recently declared the Tripoli government “illegitimate” and voted to strip the Presidential Council—formed under a 2021 UN transition agreement—of its role as high commander of Libya’s army. This move undermines international efforts to reunify the country through nationwide elections, which have yet to take place.
Libya produced about 1.15 million barrels of oil per day last month, with the largest oil field, Sharara, pumping nearly 270,000 barrels daily. However, the Sharara field has since halted production. The eastern region, home to the Sirte basin where most of Libya’s oil reserves and export terminals are located, is particularly affected.
Analysts suggest that a reduction in Libyan oil exports could temporarily push Brent crude prices to the mid-$80s per barrel. The central bank dispute follows a series of oil-sector firings by Dbeibah, raising concerns that he is attempting to assert full control over the country’s most valuable industry.
