Political Turmoil Could Plague Libya’s Oil Exports All Year Long
Bashaga: It’s unlikely that Libya will descend into a full-blown civil war again.
Without a unified government, Libya’s oil exports will remain unstable in the short-to-midterm.
As of the middle of last week, Libya was producing only about 100,000-150,000 bpd of crude oil .
While the oil market is looking for clues about losses of supply from Russia, the perennial wild card in crude production globally, Libya, has seen its output swing up and down again over the past weeks. The return of blockades on oilfields and export terminals amid renewed political rivalry is depriving the market of some of Libya’s oil production at a time of tight global supply. This market tightness is likely to tighten further when the EU embargo on seaborne Russian oil imports officially begins at the end of this year.
Libya’s oil production, typically at around 1.2 million barrels per day (bpd) without blockades on oil infrastructure, has been lower in recent weeks since factions in the east renewed blockades on export facilities. The political rivalry also blurs the estimate of Libyan output and shipments with contradicting claims about how much production the country is losing during the protests at oilfields and oil ports.
Currently, there is no immediate resolution to the renewed rivalry, which means there are unlikely to be elections this year. The political turmoil will continue to weigh on the Libyan oil sector, which is the key revenue source for the country. The distribution of revenues has been the bone of contention between the Tripoli-based and east-based institutions for years.
It’s unlikely that Libya will descend into a full-blown civil war again, Fathi Bashaga, the Prime Minister appointed by the parliament earlier this year, told Bloomberg in an interview, but noted that chaos would continue without a unified government, with little chance that elections will be conducted yet this year. Bashaga was expected to be a candidate in the presidential election that was slated to be held last December but was called off.
Related: Ukraine Hits Oil , Gas Drilling Platforms Off Crimea, Russia Says
Bashaga, backed by the east, told Bloomberg that people in the eastern part of Libya “are angry and unsatisfied with the state and as long as justice is not addressed and revenues are not distributed fairly, closures of oil will continue.”
The blockade of Libyan oil production and export facilities could end once the of Libya releases funds for the budget the east-based Parliament has approved, Bashaga told Reuters last week.
Bashaga was appointed as Libyan prime minister by the parliament based in the east of the country in March. However, Prime Minister Abdul Hamid Dbeibah, who was appointed last year through a process backed by the United Nations, refuses to cede power.
Bashaga is now based in Sirte in the east of Libya, while the rival prime minister is based in Tripoli.
The renewed power struggle in Libya led in April to major shutdowns of oilfields and oil export terminals, which reopened briefly earlier this month, only to be closed again by protesters demanding a transfer of powers from Dbeibah, who has been refusing to step down for Bashaga. The blockades of oil ports have been mostly instigated by factions in the east, including such allied with eastern strongman Khalifa Haftar and the Libyan National Army ( LNA ) he leads.
However, a western diplomat told the Financial Times that production was actually around 700,000 bpd, and while it fluctuates down by 30-40 percent these days, it’s not as low as the minister claims.
“We are aware of the oil ministry claim that Libyan oil production dropped to 100,000 barrels per day,” a western diplomat told FT . “However, we believe that to be inaccurate; actual production is significantly higher.”
Whatever the actual figure is, the oil market shouldn’t rely on a stable 1.2-million-bpd production from Libya this year.
Iran Makes Major Concession To Revive Stalled Nuclear Negotiations
In a significant concession aimed at reviving stalled negotiations with the United States, Iran has dropped its demand that the Iranian Revolutionary Guard Corps (IRGC) be removed from Washington’s list of designated terror groups, Middle East Eye reports.
Previously, Iran made the IRGC’s removal from the list a precondition for restoring the multinational deal that limits Iran’s nuclear energy program in exchange for sanctions relief. In May, it was reported that Biden decided not to budge on the IRGC designation.
The Iran nuclear deal—officially, the Joint Comprehensive Plan of Action (JCPOA)—was signed during the Obama administration after lengthy and intense negotiations involving not only the United States and Iran but also China, France, Germany, Russia, and the United Kingdom. It imposed a host of additional restrictions on a nuclear energy program that was already operating under tight International Atomic Energy Agency supervision.
Though Iran was complying with the deal, Donald Trump—caving to neocon foreign policy advisors and Israel-first mega-donor Sheldon Adelson—unilaterally withdrew the United States from the deal in May 2018.
Progressing further along a neocon to-do list that also included moving the U.S. embassy from Tel Aviv to Jerusalem, Trump designated the IRGC as a terrorist organization in 2019. In a Hebrew-language tweet, then-Israeli prime minister Benjamin Netanyahu thanked Trump for “acceding to another one of my important requests.”
Lacking any specifics, Trump’s designation centered on vague claims that Iran engaged in “malign” behavior in the Middle East and around the world.
The IRGC is a major Iranian military organization that’s independent from the country’s regular army. Established in 1979 to safeguard the nascent Islamic republic, it has grown to become the country’s dominant military entity—a force of some 125,000 complete with its own army, navy, air force and intelligence service. It also wields political and economic power.
It was the first time a state military institution had been labeled as a terrorist organization. The move was opposed by officials in the CIA and Department of Defense, along with former Obama national security advisor and current secretary of state Antony Blinken. Given other sanctions already in place on Iran and the IRGC, the designation’s actual financial impact was muted.
In tit-for-tat fashion, Iran responded by designating the Pentagon’s Central Command (CENTCOM) a terrorist organization and the U.S. government as a “supporter of terrorism.” CENTCOM is responsible for military operations across a geographic swath stretching from Egypt through the Middle East to Kazakhstan and Pakistan.
If there’s a terror case to be made against the IRGC, there’s one to be made against CENTCOM and the USA too—given CENTCOM’s cooperation with al Qaeda in Yemen and the American government’s arming of Salafist terror organizations in Syria, just for starters.
On top of that hypocrisy, the U.S. government’s application of terrorist designations has been impulsively disingenuous to the point that it saps the label of any meaning apart from the financial consequences. In practice, terror designations are just another means of bludgeoning countries that are out of favor with the U.S. government.
Underscoring that reality, Democratic and Republican members of Congress recently urged Biden to designate Russia a state sponsor of terror in response to its invasion of Ukraine. “With the designation, the United States would be able to ban dual-use exports to Russia and take economic action against other countries that do business with Russia,” said congressman Ted Lieu.
Then there’s Cuba’s whipsaw experience. Reagan declared Castro’s government a state sponsor of terror in 1982. Then Obama decided he wanted to start normalizing relations and, suddenly one spring day in 2015, Cuba wasn’t a terror sponsor anymore. Then Trump became president and, two weeks before the end of his term, Cuba was a terror sponsor all over again.
However, the most devastating blow to the credibility of America’s terror-state list comes from the countries that aren’t on the list but should be—chief among them, Saudi Arabia, where Biden is set to visit in July, reportedly to further commit the U.S. to the kingdom’s protection.
Apart from Saudi Arabia’s support of ISIS and other Salafist groups, recently-declassified FBI documents have added additional weight to accusations that Saudi embassy and consulate officials facilitated 9/11 hijackers’ transition into American life ahead of their devastating attacks on New York and Washington.
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