Libya’s oil production has sharply declined after authorities in the country’s east enforced a shutdown, escalating a crisis that the United Nations warns could lead to economic collapse.
Operations at the El-Feel oil field in southwestern Libya have stopped, with local operators signaling plans to gradually halt production nationwide, according to sources cited by Bloomberg.
The shutdown, announced by eastern authorities on Monday, is in response to the internationally recognized Western government’s decision to replace Central Bank Governor Sadiq Al-Kabir. The eastern authorities declared a “force majeure” on all oil fields, terminals, and facilities.
The dispute over control of the central bank, which manages billions in energy revenue, has been intensifying for over a week, deepening political divisions and jeopardizing a UN-brokered peace agreement.
Libya has been divided between rival Eastern and Western governments for a decade, with control over the central bank offering influence over significant revenues.
Libya, one of Africa’s leading oil producers, has been producing about 1.2 million barrels of crude per day over the past year.
Analysts at Citigroup Inc. suggested that a drop in exports could temporarily push Brent crude prices into the mid-$80s per barrel.
Since 2011, Libya has faced ongoing unrest, with its energy wealth becoming a focal point for factions vying for political control, leading to frequent disruptions in production.
A UN-backed cease-fire in 2020 aimed to end the conflict that erupted in 2014, but promised elections never materialized, causing the country to splinter once again.
The UN mission in Libya has warned against “unilateral actions” that could have 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 and urged 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.
