Libyan rebels end oil port blockade

03 July 2014

Oil crisis seems to be at an end, but further disruption is likely and could see blockades return

On 2 July, Libya’s eastern rebels announced an end to their campaign of oil terminal blockades after nearly a year of disruption. The blockades have cost the government billions of dollars in lost revenue and reduced Libya to the smallest producer in Opec.

The handover of the last two ports under rebel control sparked declines in the price of Brent crude, as traders speculated that an increase in Libyan output will boost global supply. Ongoing political turmoil in the country, however, means that any rise in exports may be limited and further disruptions are likely.

Poor turnout for the June general election means Libya’s new parliament is likely to be weak and see its legitimacy disputed. Already renegade units of the Libyan army and air force are waging an unauthorised war with Islamist militias in the country’s east.

Libya’s finance minister has blamed the oil blockades for sparking a “financial crisis”, but supplying the security needed to fend off many militant groups and successfully ramp up production will remain a major challenge. The armed forces lack training, the manpower and loyalty to the central government.

Ports that were officially returned to state control in April have yet to resume normal service, suffering supply problems and occasional forced closures by disgruntled rebels demanding money from the government.

The federalist rebels behind the port blockades are campaigning for more powers for Cyrenaica, Libya’s eastern region. They say the return of the ports is a “gesture of goodwill” to the new parliament and some of their demands have yet to be met.

If differences between the eastern rebels and Tripoli are not resolved in coming months the port blockades may resume and there would be little the government could do. An effective strategy to ensure oil production and exports return to full strength remains elusive.

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