Libya’s month-long oil shutdown is set to end following a breakthrough agreement between rival political factions to appoint a new Central Bank governor. The deal, brokered by the United Nations on Thursday, aims to restore stability to Libya’s financial and oil sectors, which have been paralyzed by political conflict.
Naji Essa has been nominated as the new interim Central Bank governor, while Marai al-Basari will remain as deputy governor. The deal also includes the appointment of a new board of directors within two weeks, signaling a major step toward unifying the management of Libya’s oil revenues, which are critical to the nation’s economy.
The agreement still requires formal approval from Libya’s eastern-based Parliament, but officials expect this to happen soon. Once approved, the deal will end the oil shutdown initiated on August 26 when the Tripoli-based government attempted to replace long-serving Central Bank governor Siddiq al-Kabir, causing the halt production at major oil fields and close key export terminals.
Up to 750,000 barrels per day (b/d) of oil production were taken offline, drastically reducing Libya’s output. However, with the agreement in place, oil production is expected to resume within the next two weeks, including at major fields like Sharara (300,000 b/d) and El-Feel (80,000 b/d).
Libya, home to Africa’s largest oil and gas reserves, has struggled with political instability since the 2011 fall of Muammar Gaddafi. The country’s oil production, a key driver of the economy, has often been disrupted by conflict among factions, particularly between the eastern-based government and the GNU government in Tripoli. The recent conflict over the Central Bank had severely impacted crude production, with output falling to 562,000 b/d by late September from a peak of 1.15 million b/d in July.
The new Central Bank deal, which includes appointing Naji Essa as interim governor and retaining Marai al-Basari as deputy, represents a significant move toward resolving the financial deadlock. Once ratified, the deal is expected to fully lift the oil blockade and reopen Libya’s key oil terminals.
The Central Bank agreement marks a critical turning point for Libya’s oil sector, which is crucial to the country’s economic stability. While the deal is expected to restore oil production and exports, the long-term success will depend on whether the political factions remain committed to implementing the terms of the agreement.
