ASSESSMENTS

Warning Signs Grow for Libyan Oil Production

Sep 27, 2019 | 09:30 GMT

This photo shows an oil installation in Libya.

A general view shows an oil facility in the northern oil-rich Libyan town of al-Buraqah on Jan. 12, 2017.

(ABDULLAH DOMA/AFP/Getty Images)

Highlights

Any attempt by the National Oil Corporation to further restrict supplies of kerosene, diesel and jet fuel to eastern Libya risks upending the balance of Libya’s oil sector, which has maintained production of about 1 million barrels per day despite the outbreak of another civil war.
Any collapse in Libya’s oil exports would further pinch supplies of light crude already strained by production outages in the wake of attacks on Saudi Arabian facilities and U.S. sanctions on Iran.
Diplomatic pressure to maintain Libyan production is likely to have success for the time being, but as long as Libya's civil war and broader political crisis continue, its oil exports will remain at risk of disruption.

As oil markets maintain their focus on how quickly Saudi oil production can bounce back from attacks on Abiqaiq and Khurais, a long-running crisis a couple of thousand kilometers west in Libya is putting more than 1 million barrels per day at risk. The civil war in Libya between forces from the eastern and western parts of the country is not the country's only production problem: The legitimacy of Tripoli's National Oil Corporation, the entity that officially governs the country's oil exports, is once again at stake. It faces a growing crisis over fuel distribution and a threat to its continuity from a breakaway unit that refuses to recognize the authority of the corporation's leaders in Tripoli....

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