Libya Oil Output Drops 400,000 Barrels a Day Amid Shutdowns
Libya’s oil output has almost halved this week — and risks taking close to 1 million barrels a day off the global market — as the country’s fields reduce operations amid a stalemate over who controls the central bank.
Output has fallen at least 400,000 barrels a day since eastern authorities on Monday ordered a shutdown of all production, according to people with knowledge of the situation. Cuts include at Sarir, operated by Arabian Gulf Oil Co., which was producing 145,000 barrels a day and has now shut down. Oil supplying the Ras Lanuf terminal also dropped at least 130,000 barrels a day.
The country was pumping 1 million barrels a day before Monday’s order, and the vast majority of production is located in the east.
The move by eastern authorities to freeze all output and exports came in response to a decision by the internationally recognized government in the west to replace central bank Governor Sadiq Al-Kabir. Al-Kabir, who has allies in the east, has refused to step down from the sensitive post where billions of dollars of oil revenues are managed among the two governments.
The 70,000 barrels-a-day Al-Feel oilfield was shut down Tuesday. The largest oilfield, Sharara, had already shut down earlier this month. The shutdowns are escalating a crisis the United Nations has warned runs the risk of collapsing the economy.
Libyan supply threats have helped support crude prices recently, though Brent futures declined on Wednesday.
Competing Governments
Libya was split into competing eastern and western governments a decade ago, and stewardship of the monetary authority gives control of billions of dollars of revenue. Its energy resources have been a key battleground for factions vying for political advantage, bringing frequent stoppages.
The central bank stalemate is the latest episode in the Libyan conflict that threatens a 2021 United Nations-backed political arrangement which ended the war between the rival camps and was supposed to bring them together after elections which never happened, leaving room for tensions.
The OPEC member — which sits atop Africa’s largest oil reserves — was producing 1.27 million barrels a day of oil on Aug. 1, according to figures from the state oil firm National Oil Corp., before the 300,000 barrels-a-day Sharara field was shut down.
