Oil operations that generate over half of Libya’s production have been shut down after allies of a renegade general ordered the blockade of ports in the country’s eastern region, officials in the North African nation said Saturday.
The disruption of crude from Libya, a key supplier to Europe, comes as global oil markets continue to digest broader tensions across the Middle East. Rival factions in Libya have battled for the control of the country’s capital since last spring, in the most recent development in nearly nine years of conflicts. The U.S., Russia, Turkey and other world powers will try to broker a peace deal between the groups in Berlin on Sunday.
The state-run National Oil Corp. said militias backing Gen. Khalifa Haftar had ordered the closure of ports under their military control in central and eastern Libya. The terminals’ shutdown and a resulting halt of oil field operations has cut output by 700,000 barrels a day—over half of the country’s daily output of 1.3 million barrels, officials said.
In a statement, the company said the blockade would bring a total shutdown of 800,000 barrels a day, or $55 million a day in lost revenue. NOC said it was bringing the ports under force majeure, a decision that would provide legal protection from oil buyers seeking damages. They also said Mr. Haftar’s allies were putting pressure on staff in western Libya’s oil fields to shut down, raising the prospect of a nearly complete interruption of Libya’s production.
The blockade was put in place to protest a military intervention by Turkey on the side of the internationally recognized Government of National Accord, or GNA, in Tripoli, said Ahmed al-Mismari, a spokesman for Mr. Haftar’s Libyan National Army, at a press conference Friday. Turkish President Recep Tayyip Erdogan said on Thursday his country had begun to send troops into Libya in support of the GNA.
The United Nations mission in Libya on Saturday urged restraint from all sides and warned the blockade “would have devastating consequences first and foremost for the Libyan people who depend on the free flow of oil for their well-being.”
Leaders and top officials from the U.S., Russia, Turkey and other world powers are set to attend a conference in Germany on Sunday that aims to produce a cease-fire between warring parties in the nearly decadelong Libyan conflict. Turkey and Russia brokered peace talks in Istanbul last week that failed to produce a deal.
Libya’s oil production has been frequently disrupted by attacks and blockades from rival militias since the 2011 toppling of strongman Moammar Gadhafi. Libya relies on oil exports for over 90% of its national revenue, and the instability of production has plunged Libya into a financial crisis.
The Libyan shutdown comes after tensions escalated in other parts of the Middle East. Earlier this month, tensions flared up in the Persian Gulf after the U.S. killed a top Iranian general in Iraq, to which Tehran retaliated with strikes on U.S. forces there. Producers in the region fear they could be caught in the crossfire after Saudi oil facilities were attacked by missiles and drones in September.
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Write to Benoit Faucon at benoit.faucon@wsj.com
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