Report: Libyan Crisis Affecting Global Oil Markets

0
345

Protests continue to rock Libya, with demonstrators setting fire to the Libyan Parliament in the eastern city of Tobruk. In Tripoli, protesters are demanding action against armed militias, soaring inflation, and power outages. Global oil markets are on edge over the spectre of another civil war.

Since mid-April this year, key oilfields and ports have been closed due to protests stemming from a political crisis. This has rival factions scrambling to secure control over oil facilities and oil revenues.

Prior to this, Libya was producing around 1.2 million crude oil barrels a day. Today, the country is producing about 85% less. Exact figures are difficult to come by, with the Oil Ministry and the National Oil Company (NOC) not cooperating with data.

The Tripoli-based Central Bank of Libya (CBL) says the country has officially lost $3.5 billion dollars in the first half of this year, due to the closures.

The first six months of 2022 saw Libya collect 37.3 billion dinars from oil sales. That amount is 100 million dinars less, compared to the first five months of last year.

Negotiations between rival factions, east, and west, have been ongoing in both Cairo and Geneva. There is yet to be an agreement in sight, for a framework that would make it possible to hold free and fair elections.

Analysts said that there are many reasons why protesters have decided to take to the streets in anger. They can be summarized simply by the failure of the politicians to reach a political accord, and their preference instead to wrestle with each other over power, at the expense of ordinary citizens.

The stalemate has most recently prompted the United Nations and US officials to suggest that Libya’s oil revenues be managed by third-party caretakers. This is to ensure equitable distribution, and end the impasse.

Last week, the UN Advisor to Libya, Stephanie Williams called for a temporary mechanism to manage oil revenues. Without one, the current stalemate could last indefinitely, she claimed. Such a move would essentially mean appointing a foreign trustee to oversee Libya’s oil wealth.

US Ambassador to Libya, Richard Norland has likewise suggested a trusteeship for Libya’s oil revenues.