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Oil markets under pressure as Libya closes fields

28 August 2024

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The global price of crude has come under pressure after Libya’s eastern government declared a shutdown of all crude oil production and exports on 26 August, escalating the conflict over the control of its Central Bank and oil revenues.

This force majeure declaration affects all oil fields, facilities and export terminals.

While the eastern government, led by military leader Khalifa Haftar, controls most of Libya’s oil fields, the National Oil Corporation (NOC) has yet to confirm the halt.

In a statement, Rystad Energy’s senior analyst Svetlana Tretyakova said: “Increasing instability in the region, ongoing supply outages in Libya and a warming macroeconomic sentiment mean the recent slump in crude prices is over, at least momentarily."

The consultancy Rystad Energy believes that the power struggle over the leadership of the Central Bank of Libya, with Tripoli attempting to replace Governor Sadiq Al-Kabir, threatens to further reduce Libya’s oil output amid escalating east-west political tensions.

Libya is struggling to recover from years of conflict after the 2011 Nato-backed uprising that overthrew longtime dictator Muammar Gaddafi.

It remains divided between the UN-recognised government in the capital, Tripoli, led by Prime Minister Abdulhamid Dbeibah, and the rival administration in the east backed by military strongman Khalifa Haftar.

In a statement, the United Nations Support Mission in Libya (UNSMIL) expressed deep concern over the deteriorating situation in Libya.

The Mission said that it believed “continuing with unilateral actions will come at a high cost for the Libyan people to resolve the protracted crisis, and risks precipitating the country's financial and economic collapse”.

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Wil Crisp

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