UN expresses deep concern over Libya’s oil field closure

The United Nations Support Mission in Libya (UNSMIL) has voiced concerns about the growing conflict in Libya over the leadership of the country's central bank, the only globally acknowledged depository of its oil revenues.

PHOTO: Oil barrels with the flag of Libya. Getty Images

The UNSMIL has called for “immediately lifting force majeure on oil fields and refraining from using the country's primary revenue source for political ends.” However, Libya’s state-owned oil company National Oil Corporation (NOC), which oversees the country's oil resources, is yet to confirm the shutdown of oil production.

Libya is facing a political turmoil due to the ongoing dispute over the control of its central bank.

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

Crude oil production from El Feel oilfield in southwestern Libya has been halted, according to a Reuters report. Production at other oilfields in the east and southeast has also stopped, with local operators planning a gradual shutdown of total production across the OPEC+ member, a report from Bloomberg suggests.

The “unrecognised” government in eastern Libya backs the current governor of the central bank, two analysts from ING Bank remarked. The threat to stop oil production “appears to be a negotiating tactic,” they added.

Brent crude’s price moved higher following reports that the key oilfields in eastern Libya were shut down yesterday due to escalating unrest over control of the country’s central bank.

Libya's crude oil output declined by 19,000 b/d on the month in July to 1.17 million b/d, according to OPEC’s latest monthly oil market report (MOMR).

“A prolonged outage [in Libyan oil production] will leave the market in a deeper deficit,” ING Bank’s analysts said.

By Aparupa Mazumder

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