Libya Closes Biggest Oil Field and Warns of More Shutdowns

(Bloomberg) -- Libya's oil production has fallen by more than half a million barrels a day as a wave of political demonstrations engulfs the OPEC member's energy industry.

The Sharara field in the west of the country, which can pump 300,000 barrels each day, was closed after protesters gathered at the site demanding Prime Minister Abdul Hamid Dbeibah quits, according to people familiar with the matter. That came after the nearby El Feel deposit, with a daily capacity of 65,000 barrels, was halted for the same reason.

The country's output is down by 535,000 barrels a day and is bound to fall further, one of the people said. Daily production was as much as 1.1 million barrels as of Sunday.

State-owned National Oil Corp. formally suspended loadings from the eastern port of Zueitina on Monday and said it was the “start of a painful wave of closures.”

Two Libyan Ports Stop Loading Oil Amid Political Standoff

The NOC has also declared force majeure -- a clause in contracts allowing exports to be stopped -- at Mellitah, a western port fed by Sharara and El Feel, according to the people. In addition, the Brega terminal was shut on Monday, they said, while protesters are threatening to stop operations at Es Sider and Ras Lanuf.

Workers at Libyan oil companies of Zueitina, Mellitah, Sarir and AGOCO were forced on Sunday “to completely and gradually shut down production,” the NOC said in a statement. “The NOC has always stressed the importance of neutralizing the oil sector and avoiding the political conflicts in the country.”

The shutdowns are the latest in a series of disruptions to hit Libya's energy sector amid the worsening political crisis. Oil prices climbed early on Monday partly because of the interruptions.

They come at a delicate time for global commodity markets. Oil supplies have tightened since Russia's invasion of Ukraine and Brent's soared above $110 a barrel.

Libya, mired in conflict since the 2011 fall of dictator Moammar Al Qaddafi, is facing a standoff between rival politicians. Dbeibah is resisting calls from some lawmakers to resign after they declared former interior minister Fathi Bashagha as prime minister in February.

Earlier this month, representatives of eastern commander Khalifa Haftar quit a national military committee that's meant to ensure a cease-fire holds. They also said Haftar should block oil exports.

The North African nation was scheduled to hold a presidential election in December. But it was delayed with just days to go, dealing a blow to peace efforts.