Libya’s central bank power struggle is coming to a gas station near you
The question of who controls Libya’s oil revenues is causing strife within the country and beyond.
Whenever there’s a burst of inflation, there are always going to be fingers pointed at central bankers and grumbling about money printing or artificially low interest rates.
This morning, crude oil is surging as much as 3% – one of the most common experiences with inflation the average person has, through gas prices – and a central bank is clearly at the center of the matter.
Just not the way you might expect.
Libya has been in political turmoil since the end of Qaddafi’s reign, with rival governments in the western and eastern parts of the country. Oil is far and away Libya’s most important export, and the money earned from selling the critical natural resource flows to the central bank. The Western-based government is attempting to oust the current central bank governor, who is supported by the rival Eastern-based government and won’t step aside.
In response, the eastern leaders announced that they’re turning off the oil taps.
Libya has been producing about 1.2 million barrels of oil per day in recent months; most of the nation’s known oil reserves and its most important oil export terminals are in the east.
“In the simplest of terms, the dispute centers around the Eastern(-Libya)-based government dominated by warlord Khalifa Haftar’s fear that an attempt by the Western(-Libya, Tripoli)-based and internationally-recognized government of Abdul Hamid Al Dabaiba to replace the country’s long-standing central bank governor will jeopardize the former’s access to (oil) revenue,” writes Andrew Bishop, senior partner and global head of policy research at Signum Global.
He warns that this termination in oil flows could “last for at least a month (and possibly far longer).”
