Oil takes center stage in Libyan conflict

An analyst at a British risk consultant group said the latest conflict over oil could lead to long-term outages for the OPEC member.

By Daniel J. Graeber
Conflicting claims over oil in OPEC-member Libya threaten to tear the country apart, a researcher at a risk consultant group said. File Photo by cherezoff/Shutterstock
Conflicting claims over oil in OPEC-member Libya threaten to tear the country apart, a researcher at a risk consultant group said. File Photo by cherezoff/Shutterstock

June 26 (UPI) -- The Libyan army lacks authority to take control over oil exports, the national oil company said in response to what could be a major blow to the OPEC member.

Libya's National Oil Corp. said it rejected a move by the Libyan National Army to move on exports from the Gulf of Sirte. The move followed militant raids on oil storage depots in the east of the country that sidelined production from the member of the Organization of Petroleum Exporting Countries.


Mustafa Sanalla, the chairman of the NOC, said in a statement the Libyan military action was in stark contrast to the authority recognized by the international community, including the United Nations and OPEC.

"Instead of defending the rule of law in Libya by handing the Gulf of Sirte ports over to the operational control of the legitimate and internationally recognized National Oil Corp., the Libyan National Army has decided to put itself above the law," he said.

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The NOC last week said two of the storage tanks at the Ras Lanuf port after militants stormed the facility, saying the damage was catastrophic. Reconstruction efforts could take several years, especially considering the tense security situation in the country.


The NOC attributed last week's attacks to a militia led by Ibrahim Jadhran, who opposes the national army.

Derek Brower, the head of research at British risk consultancy group Petroleum Policy Intelligence, told UPI the move by the Libyan army jeopardizes the prospect for peace in the country.

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"At its worst, this could spark more fighting in Libya or even the partition of the country," he said Tuesday. "It could also lead to a prolonged shut down of the bulk of Libya's oil output. Oil is now front and center of the conflict in Libya."

After the outbreak of civil war, Libyan oil production ground to a halt, prompting the International Energy Agency in the early part of the decade to call on member states to release oil from their strategic reserves to offset the loss.

Libya fractured along competing political lines in the wake of civil war. The U.N. Support Mission in Libya said the political and security situation is not sustainable and all parties should work to ensure unity.

RELATED HRW: Political fractures an economic risk for oil-rich Libya

Libya is a member of the Organization of Petroleum Exporting Countries and on the sidelines of a collective agreement to curb production to stabilize a market recovering from the collapse in oil prices in early 2016.


OPEC economists said in their latest monthly market report that Libyan crude oil production last year improved 109.5 percent compared to 2016. Secondary sources reporting to OPEC said Libya produced an average of 955,000 barrels per day.

Conflict sidelined about a quarter of Libya's output so far.

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