By Charles Kennedy of OilPrice.com
Libya's oil production has resumed after a political agreement was reached between the two rival factions.
The shutdown was caused by a dispute over the leadership of the Central Bank.
The resumption of production is expected to boost Libya's economy and stabilize global oil markets.
Libya’s oil production is resuming on Thursday, the country’s Oil Minister Khalifa Abdul Sadiq told Bloomberg in an interview today, after more than a month of suspended output due to a political standoff between the eastern and western administrations in the North African OPEC producer.
The end of this Libyan crisis will lead to the return of a few hundred thousand barrels of crude per day to the market, which is currently fearing a supply shock from the Middle East on the brink of an all-out war.
Crude production at most Libyan oilfields has been suspended for over a month after the country’s eastern and western administrations clashed over who should be governor of the Central Bank of Libya.
At the end of last week, the rival factions reached an agreement in UN-mediated talks over the election of the Central Bank’s leadership, paving the way to restoring oil production and exports.
These have plummeted in the past month.
Stephanie Koury, the acting head of the United Nations Support Mission in Libya (UNSMIL), said last week, commenting on the agreement,
“I also want to emphasize the urgent need to end the closure of oil fields and disruption of oil production and export. I appreciate the commitment made by the authorities in the East to lift the closure.”
Libya, which pumped about 1.2 million bpd of oil before the halt, was plunged into a deeper political crisis over the row about the leadership of the Central Bank of Libya, the only internationally recognized depository of Libya’s oil revenues.
The internationally recognized government in the capital city in the west, Tripoli, was trying to replace Sadiq Al-Kabir, the governor of the Central Bank of Libya. This has led to the latest controversy between the Eastern and Western governments and political factions, threatening again to reduce Libya’s oil production and exports.
Last week, estimates showed that crude oil exports from Libya crumbled to around 400,000 bpd in September from 1 million bpd in August.
