A powerful military figure in eastern Libya has threatened to use armed force unless the politically fragmented country agrees a mechanism for the "fair" distribution of oil revenues by the end of August.
The threat issued late on 3 July by Khalifa Haftar, head of the Tobruk-based Libyan National Army, represents the most serious risk to the country's political stability, and its 1.2mn b/d of crude production, since he agreed to lift a previous oil blockade in July 2022. Haftar is demanding the creation of a committee that can be responsible for Libya's financial arrangements and ensure the "fair distribution of revenues" across the country's municipalities.
Libya is politically divided between an internationally recognised administration in the west, which has control over oil revenues, and a rival administration in the east, which is home to around three quarters of the country's oil production capacity.
Tensions have been rising in recent weeks, with the eastern-based administration accusing authorities in Tripoli of corruption and abuse of oil revenues. The prime minister of the eastern-based government, Osama Hamad, threatened to stop the flow of oil and gas, including exports, unless his administration is allowed to appoint an official with oversight of state-owned oil firm NOC's finances.
Last week, US ambassador to Libya Richard Norland urged "Libyan actors to abandon threats of an oil shutdown". Haftar has responded by saying foreign ambassadors should "refrain from sticking their noses in Libyan affairs". He also accused ambassadors of "deepening the crises among Libyans" without offering any solution.
Control over oil revenues lies at the heart of Libya's inability to escape the chaotic political transition that began with the overthrow of Muammar Gaddafi in 2011. The latest threats by eastern powerbrokers should be seen as a move to gain more access to oil revenues. The central bank in Tripoli put Libya's oil and gas revenues at $27bn last year. NOC reported revenues of $1.66bn for May.
Libya produced 1.18mn b/d of crude in May, according to Argus estimates, with exports currently running at just over 1mn b/d.
