Libya stops oil production due to political conflict

Oil production in Libya declined sharply this week, losing almost half of its volume. This threatens the global market with a deficit of about one million barrels per day.

The reason for the fall was the decision of the eastern authorities to stop oil production and exports in response to the replacement of the head of the central bank Sadiq Al-Kabir by an internationally recognized government in the West. Al-Kabir, who enjoys support in the east, refused to leave the post overseeing billions in oil revenues, which led to a political impasse.

Since Monday, production has decreased by at least 400 thousand barrels per day. Key fields such as Sarir (which produced 145 thousand barrels per day) and oil facilities supplying the Ras Lanuf terminal with oil were closed (they lost at least 130 thousand barrels per day).

Before the order to stop production, Libya was producing 1 million barrels per day, most of which came from the east. The closure of the Al-Fil (70 thousand barrels per day) and Sharara fields (closed at the beginning of the month) exacerbates the economic crisis, which, according to the UN warning, could lead to a collapse of the country's economy.

Despite the fact that the threat of a reduction in supplies from Libya supported oil prices, Brent futures fell to $78.83 on Wednesday.