Libya Energy Insights (May 2025)

Market Outlook

Government of National Unity (GNU) Prime Minister Abdulhamid Dabaiba has botched his attempt to rule supreme over Tripoli and is now finding himself politically isolated, encircled by hostile militias, and unable to strategically consolidate his positions for fear of antagonising the Libyan National Army (LNA).

While energy facilities have so far not been impacted by recent developments, there are several factors which could motivate eastern authorities to announce force majeure and shut down key energy infrastructure.

Unless Dabaiba cements a long-term ceasefire with his enemies in western Libya or an overall political solution is brought forward by domestic and international actors, the outlook will remain highly volatile and increasingly dangerous with risks of protracted war in Tripolitania, localised energy facility shutdowns from protesters in western Libya, dangerous political arm-wrestling between various stakeholders, and a potential oil blockade in southern and eastern Libya.

Key Highlights

• Dabaiba has plunged western Libya into chaos after attempting a security sweep in the capital which has backfired and jeopardised his grasp over power, instead of putting him in a stronger position to find common ground with the east.
• The idea of rapprochement between Dabaiba and the LNA is no longer relevant as the latter views Dabaiba as an actor on his way out and is split between either watching his downfall from the sidelines or gradually nudging the GNU’s collapse.
• Protests calling for Dabaiba’s ouster, a militia momentarily storming the National Oil Corporation (NOC), political efforts to bring about a new transitional government, and the growing risk of internal war in Tripoli are all factors which could push the LNA out of its inertia by adopting policies ranging from threatening a blockade, indirectly supporting anti-Dabaiba forces in western Libya, and actually implementing a blockade in the south and east of the country that could remove as much as 900,000 barrels per day of oil production.
• While the LNA remains highly wary of the unintended consequences of a blockade and prefers a wait-and-see approach, any unwelcome action from Dabaiba would push eastern authorities to raise up the ante.
• Cognizant of his fragile position, the GNU prime minister has so far avoided taking a direct stance against the LNA or pursuing changes at the level of key institutions like the NOC or Central Bank of Libya.
• Nonetheless, the dire financial situation the GNU finds itself might push Dabaiba to seek ways to diminish eastern Libya’s growing influence over the energy sector, notably since the end of the oil-for-fuel barter system has added financial pressures on state coffers.
• In the midst of political and security volatility, the NOC struggles to push forward with its development plans to boost output, thus further casting a shadow over its bidding round.

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