After months of interruptions and limitations on crude oil production, the two parties that make up Libya’s “fractured” government have reached an agreement. Libyan authorities announced that oil production would return to normal from this Thursday. Oil Minister Khalifa Abul Sadeq revealed to Bloomberg in an interview, operators of the country’s oil fields are already working to return hundreds of thousands of barrels per day to global markets, having temporarily resolved the political confrontation that keeps the country divided in two.
The government in the eastern part of the country (the country is roughly divided between East and West), which had initially ordered the suspension of production, has lifted a “force majeure” orderallowing the resumption of operations in all export fields and terminals, Libyan media reported this Thursday. Abul Sadeq also reported that production from the country’s largest field, Sharara, which was pumping 260,000 barrels per day before the shutdown, would also resume on Thursday.
The typically North African nation produces more than 1.2 million barrels per daybut that figure fell to less than 450,000 at the end of August after the country’s western (western) government fired the central bank governor, running the eastern (eastern) part of the country, under another government, and ordered a shutdown large oil fields under its control.
To better understand the situation, it is interesting to analyze the current situation in Libya. The country is currently divided between two rival administrations.: the Government of National Unity (GNU) of Abdelhamid Dabeiba, recognized by the international community and established in Tripoli (west); and the Executive of Benghazi (east), elected by Parliament and led by Osama Hamad and under the supervision of Marshal Hafter. Struggles for control of the country have repeatedly led to the closure of oil fields.
Hundreds of thousands of barrels of oil
Still, the return of these hundreds of thousands of barrels to the market will put downward pressure on crude oil at a time when weak global demand has pushed prices to their lowest level in two years. However, oil prices have been recovering for several days due to escalating tensions in the Middle East, which has allowed crude oil to Brent recovers $75after several days flirting with the zone of 70 dollars per barrel.
Representatives of Libya’s rival administrations agreed on September 26 to appoint a new governor, Naji Issa, resolving the impasse over a post that effectively grants control of billions of dollars in energy revenue.
Libya is mired chaos since the overthrow of dictator Muammar Gaddafi in 2011with clashes between armed groups loyal to different factions or individuals who frequently close key oil fields in their struggle for influence. The country has the largest known reserves of crude oil in Africa.
The September 26 agreement, like previous Libyan agreements, rests on fragile foundations. A United Nations-backed ceasefire in 2020 succeeded in ending the fighting, but has yet to bring the country to national elections or resolve the long-standing divide between East and West.
