The Libyan National Oil Corporation has been forced to declare dominance in two major oil ports and two major oil fields and to effectively take all oil exports from the country offline. The closure will come at an even more difficult time for the world oil market, as Western countries are already looking for ways to replace the millions of barrels they buy from Russia every day.
Libyan oil ports have been closed and reopened since the country’s civil war began in 2011. As the front lines repeat, rival governments and warring factions are breaking farms and terminals in hopes of dominating oil revenues; during armistices, armistices and retreats, production returns to normal and begins.
The latest shutdown hit the Al Sharara oil fields (the largest in Libya), the El Feel oil field and the loading terminals in Melita and Zueitina. This requires a large portion of Libya’s million barrels per day of market export capacity and cancels plans set by the NOC to increase exports by another 400,000 bpd.
The immediate cause seems to be the new constitutional crisis. Libya’s inhabited coast has long been divided between a UN-recognized government based in Tripoli and a war regime based in the eastern half of the country. In a negotiated agreement of March 2021, the two sides agreed to appoint a new interim prime minister for the whole of Libya, Abdul Hamid Dbeibah.
However, in February 2022, the Eastern government in Tobruk rejected the agreement and appointed its own Prime Minister, Fathi Bashagh. Dbeibah refused to resign, saying she would stay until good elections were held.
Protesters supporting Bashagh occupied the El Feel and Al Sharara production facilities and, according to local media, demanded the release of Dbeibah. NOC was forced to suspend production during these “accidental outages” for safety reasons.
This disorder appears to have contributed to rising world oil prices. After a week of trading at $ 105 a barrel, Brent oil futures rose to about $ 113 a barrel on Monday.