Libya Halts Oil Production Amid Escalating Tensions

The eastern Libyan government has announced the closure of all oilfields and the halting of production and exports, amid ongoing power struggles. Waha Oil Company plans to gradually reduce output leading to a potential halt. Libyan factions, including those backed by Russia and Turkey, remain locked in political conflict over control of oil revenues.

The government in eastern Libya announced on Monday that all oilfields would be closed down and production and exports halted. However, the internationally recognised government in Tripoli has not confirmed this. The National Oil Corp (NOC), which manages Libya's oil resources, has also provided no confirmation.

NOC subsidiary Waha Oil Company has announced plans to gradually reduce oil output, warning of a complete production halt due to 'protests and pressures.' Waha operates a joint venture with TotalEnergies and ConocoPhillips and has a production capacity of approximately 300,000 barrels per day (bpd), exported through the eastern port of Es Sider.

Waha runs five main oilfields in the southeast, including Waha, Gallo, Al-Fargh, Al-Samah, and Al-Dhahra. Most of Libya's oilfields are located in the east, controlled by Khalifa Haftar's Libyan National Army (LNA). The Benghazi government has not specified how long the oilfields could be closed. However, two engineers at Messla and Abu Attifel oilfields reported that production was still ongoing as of Monday, with no orders to halt output.

A power struggle continues in Libya over control of the central bank and the country's oil revenues. Tensions escalated after efforts by political factions to remove Central Bank of Libya (CBL) head Sadiq al-Kabir, leading to the mobilization of rival armed factions. Since the 2011 NATO-backed uprising, Libya has struggled for stability, splitting in 2014 into eastern and western factions, with Russian and Turkish involvement.

Earlier this month, the NOC declared force majeure at one of Libya's largest oilfields, Sharara, which can produce 300,000 bpd, due to protests. Libya's oil production was at about 1.2 million bpd before Sharara's closure. If eastern oil production halts, El Feel in southwestern Libya, with a capacity of 130,000 bpd, would be the only functioning oilfield left.

(With inputs from agencies.)