The Libyan Political Crisis That's Crippling World Oil Markets

A blog about business and economics.
Sept. 4 2013 2:32 PM

The Libyan Political Crisis That's Crippling World Oil Markets

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Libyan protesters attack the offices of Muslim Brotherhood-backed Party of Justice and Construction, in the Libyan capital of Tripoli on July 27, 2013. In addition to the Muslim Brotherhood, Libya is also home to some very good oil.

Photo by Mahmud Turkia/AFP/Getty Images

While the U.S. Congress and the Obama administration have been debating Syria, the fallout from the civil war in Libya turns out to be producing a crisis in world oil markets as "workers and armed militias that guard oil installations are pushing federalist demands and calling for a bigger share in the country's oil wealth":

Oil industry executives say Zeidan's shaky central government risked widening violence that could descend into civil war if it uses force to recapture oilfields.
Libya's oil production has fallen further to around 150,000 barrels per day (bpd) - from around 1.4 million bpd in April - confined to offshore rigs protestors cannot reach, a National Oil Corp (NOC) official said.
Armed groups have also threatened to close the Wafa gas field, which if shut would cause severe power shortages in the capital, an oil official told Reuters.
Wafa, in the south west, is the only major gas field left open to supply power stations. Libya is importing much more diesel and fuel oil for electricity plants that previously relied on gas.
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Obviously the proximate loser here is the domestic economy of Libya. But Libya's oil is unusually high-quality stuff, so its withdrawal from global markets has a substantial impact on worldwide prices.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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