Libya: Oil Giant, Collapsing State

Libya: Oil Giant, Collapsing State

09/23/14

Jacob Steinblatt

Economics, Energy, Libya

Despite forecasts that Libya could soon produce one million barrels of oil per day, the nation is falling apart. How is this possible? 

On August 25, Libya’s defunct General National Congress (GNC), a body formerly dominated by Islamist-leaning politicians, reconvened, declaring itself the sole authority of the land in opposition to the currently governing House of Representatives. This move seemingly pushed Libya ever closer to descending into a full-on civil war. On the other hand, Libya’s oil production is steadily on the rise, hitting 800,000 barrels per day (bpd) on September 10: about four times what the country was producing in June. In fact, Libya’s National Oil Corporation forecasts production to hit one million bpd by October.

While this spike in production remains notable, given growing reports of militia violence and chaos across the country, such gains remain vulnerable to the crises currently gripping Libya, and we may soon witness another tumble. Previous such predictions of a rise in oil production, by Libya’s Ministry of Economy in late 2013, were predicated on a more stable political and security situation in Libya than currently exists. Conversely, there are currently two parallel governments competing for control, with respective militias battling in the country’s two biggest cities, Tripoli and Benghazi. These hostilities have rendered two of the country's primary international airports unusable, restricted Libya’s over-ground border crossings with its neighbors, and have raised the specter of international military intervention.

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