Libya’s oil production has plummeted after authorities in the country’s east enforced a shutdown, intensifying a crisis that the United Nations warns could threaten the economy’s collapse.
Operations at the El-Feel oil field in southwestern Libya have ceased, according to sources, and local operators are signalling plans to gradually halt production nationwide, Bloomberg reported.
The shutdown, announced by eastern authorities on Monday, is a reaction to the internationally recognized Western government’s decision to replace Central Bank Governor Sadiq Al-Kabir. The eastern authorities said the “force majeure” applies to all oil fields, terminals, and facilities.
CBN dispute
A dispute over control of the central bank, which manages billions of dollars in energy revenue, has been escalating for over a week, further deepening political divisions and jeopardizing a UN-brokered peace agreement.
The country has been split between rival Eastern and Western governments for a decade, and control over the central bank offers influence over billions of dollars in revenue.
Libya, one of Africa’s leading oil producers, has been producing roughly 1.2 million barrels of crude per day over the past year. Analysts at Citigroup Inc. suggested in a note on Monday that a drop in exports could temporarily push Brent crude prices into the mid-$80s per barrel.
Since 2011 Libya has been plagued by ongoing unrest. Its energy wealth has become a focal point for factions battling for political control, resulting in frequent disruptions to production.
A United Nations-backed cease-fire in 2020 was intended to end the conflict that erupted around 2014, but promised elections never materialized, causing the country to splinter once again.
The UN mission in Libya has cautioned against “unilateral actions” that could come at a “high cost for the Libyan people” and potentially trigger the country’s financial and economic collapse.
The mission announced an emergency meeting with all parties to resolve the crisis, urging the immediate restart of oil production.
To ease tensions, authorities in Tripoli on Tuesday called on the east to rejoin the UN-backed agreement and focus on organizing long-overdue nationwide elections by February 17.
