UN-brokered deal in Libya eases some oil supply concerns

Brent crude's price has come under downward pressure following a United Nations-brokered agreement in Libya that united the rival eastern and western administrations on the leadership of the central bank.

PHOTO: Libya's flag on a political world map. Getty Images

Concerns about disruption in crude oil production in the OPEC member have partially eased as delegates from the eastern and western administrations mutually decided to appoint new leaders for the country’s central bank, the only globally acknowledged depository of its oil revenues, according to a statement by the United Nations Support Mission in Libya (UNSMIL).

“Representatives from the House of Representatives and the High Council of State reached a compromise on appointing new leadership for the bank,” UNSMIL said in a statement. The two parties will mutually appoint a new governor, deputy governor, and board of directors for the Central Bank of Libya, UNSMIL added.

This news has eased supply concerns in the global oil market and put downward pressure on Brent, analysts said. “[Brent] crude oil fell, on signs that Libyan supply disruptions could ease,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Earlier this month, the Benghazi-based government, which opposes the internationally recognized administration in Tripoli, announced plans to halt all crude oil production sites. Although the Benghazi government, backed by Libyan military leader Khalifa Haftar, lacks international legitimacy, Haftar's forces control most of Libya’s oilfields.

The latest deal has paved the way to a potential revival in Libyan oil production, two analysts from ING Bank noted. The country has a total production capacity of about 1.18 million b/d, according to OPEC.

By Aparupa Mazumder

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