The Market May Be Misinterpreting Libya’s Oil Blockade

Claims that the rival governments in Libya will soon resolve their differences and entirely lift the blockade on oil exports put in place by the Haftar clan in the country’s east seem hard to believe.

Two weeks ago, we saw Libya’s oil exports plummet by over 80% (week on week), with the NOC canceling cargoes.

For the past week, exports have reportedly ticked up to an estimated 550,000 bpd, from the 1-1.2 million bpd Libya was exporting prior to the August 26 blockade.

Kpler data from Thursday put Libya’s crude exports so far for September at 410,000 barrels per day, compared to around 1 million bpd prior to the blockade. The markets are most likely misinterpreting this as ‘conflict resolution’, when the reality is that it is more oil money being diverted to Benghazi in the runup to a final showdown with Tripoli.

On Thursday, Libya’s Oil and Gas Minister attempted to distract everyone by announcing that the country planned to double its natural gas production to 4 billion cubic feet over the next 4-5 years. It’s a bold statement for a country that has already entered the cold phase of its next civil war.

In Tripoli, the ‘western government’, led by the Dbeibah clan, is digging in and securing the capital–at least, they are attempting to do so. They claimed this week to have secured full control for the interior ministry over 64 government headquarters in two central municipalities. What they mean by that is they cut a deal with their various militia backers.