Oil prices rise as eastern Libyan government announces halt to all production

Oil prices rose nearly 3 percent early Monday, supported by fears of escalating conflict in the Middle East and rival Libya’s government in the east, which announced the shutdown of all oil fields, production and exports.

The government of Benghazi in eastern Libya, which is a rival of the Tripoli government in the politically divided North African OPEC producer, said on Monday it would halt crude production and exports.

The threat to Libya’s oil production and exports comes as the Tripoli government moves to replace the leadership of the country’s Central Bank in a growing row over who should oversee Libya’s oil revenues.

The “force majeure” on Libya’s oil production will apply to all oil fields, oil facilities and export terminals, according to a Facebook post by eastern authorities cited by Bloomberg.

The eastern government backed by military leader Khalifa Haftar is not recognized internationally, but Haftar and his men control most of the country’s oil fields.

However, by noon local time on Monday, Libya’s National Oil Corporation (NOC), the company that controls the country’s oil resources, had not confirmed any information about the production shutdown.

In recent weeks, the situation in Libya has deteriorated with the re-emergence of east-west rivalry and centered on the leadership of the Central Bank of Libya – the guardian of Libya’s wealth and revenues from oil exports and the only internationally recognized depository for them. income.

The internationally recognized government in the western capital, Tripoli, is seeking to replace Sadiq Al-Kabir, the governor of Libya’s Central Bank. This led to the latest controversy between eastern and western governments and political factions, again threatening to cut Libya’s oil production and exports.

Last week, the Central Bank resumed operations following the kidnapping of one of its employees and an attempt by the rival government to take down its head, as the battle for control of the financial institution intensifies. Tripoli tried to force out the eastern-aligned Central Bank governor, Al-Kabir, and replace him with Mohamed Shukri.

By Tsvetana Paraskova for Oilprice.com

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