Oil prices soar! Libya suddenly announced: it will stop all oil exports

The eastern government of Libya announced that it would stop all oil production and exports, just because of a "central bank dispute"...
On Monday, as the political situation in Libya deteriorated, the eastern government of Libya announced that it would stop all oil production and exports.

The eastern government of Libya issued a statement on the social platform saying that all oil fields, terminals and oil facilities were facing "force majeure". The move was a response to the hostile government based in Tripoli trying to take over the central bank of Libya.

After the news was announced, oil prices rose sharply, with WIT crude oil standing at $76 and Brent crude oil hitting the $80 mark.
Although the eastern government of Libya is not recognized by the international community, most of the oil fields are currently under the control of Khalifa Haftar, the military leader of eastern Libya.

The embattled governor of the Central Bank of Libya, Sadiq Al-Kabir, insisted on opposing attempts to overthrow him, deepening the more than week-long standoff between the country's hostile factions for control of the huge oil revenues of the fragmented OPEC country.

According to local media reports, Al-Kabir filed a complaint with Libya's attorney general last Sunday in what appears to be a last-ditch effort to prevent a "power grab".

The Libyan central bank has become the latest important venue for control of the North African country. Libya has been plagued by unrest since the NATO-backed uprising against long-time ruler Muammar Gaddafi in 2011, with divisions between the country's eastern and western governments.

Relations between Al-Kabir and Tripoli Prime Minister Abdul Hamid Dbeibah have been deteriorating over the past year, peaking on August 18 when the former was accused of mishandling funds.

Al-Kabir said the move was illegal. Support for him by Libya's eastern factions has increased tensions between competing governments, jeopardizing a UN-brokered 2020 agreement aimed at reuniting the war-torn country, which has Africa's largest oil reserves.

Libyan media, including the Al Marsad news agency, said a government delegation tried to enter the central bank's offices in Tripoli on Sunday to deploy a new management committee but was stopped by security personnel. The central bank of Libya said the regulator's suspension of operations affected services including foreign exchange.

For crude oil, Citi said the risk of light sweet crude supply disruptions increased as Libya's divided elites fought over the central bank's independence and control over oil revenues, which could push Brent prices to around the mid-$80-$89 per barrel range.

Citi added that refinery maintenance and additional supply from OPEC+ could curb crude oil price overshoots, but the hit to sweet and light crude spreads could last longer. Analysts added that the next major move in oil prices will depend in part on the next moves of Israel and Hezbollah.

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