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Qatar Spat Spills Over To Libya’s Oil, Rekindles Political Divides

Just as Libya’s National Oil Corporation (NOC) is targeting to raise crude oil output to 1 million bpd by the end of July, the rivaling factions in the east and west of the country have entered into a fresh dispute over Libya’s crude oil sales after several Arab states cut ties with Qatar last week.

In the east, the military commander is supported by Saudi Arabia, the United Arab Emirates (UAE), and Egypt—three of the Arab states that severed ties with Qatar, accusing it of sponsoring terrorism and destabilizing the region.

According to Bloomberg, the chairman of the eastern NOC in Libya, Nagi al-Maghrabi, has accused Qatar of using its 8.5-percent stake in commodity trader Glencore to control the Swiss trader’s sales of Libyan crude oil. Authorities in eastern Libya have threatened to block Glencore operations, which could potentially reduce (again) Libya’s output and threaten its tentative recovery.

Earlier this year, Glencore extended its deal with NOC to be the exclusive trader of around 230,000 bpd of Libya’s oil production from the oil fields Sarir and Mesla.

On the other hand, NOC’s chairman in the western city of Tripoli, Mustafa Sanalla, said in a statement on Tuesday that he had warned the head of the interim government in Beyda, Abdalla Thinni, not to use the GCC-Qatar crisis as a pretext for illegal oil exports.

“UN Security Council Resolutions and a slew of statements by the international community recognize NOC as the legitimate seller of oil on international markets,” Sanalla said.

Sanalla noted that contracts signed by Nagi al-Maghrabi, appointed acting chairman of a parallel institution by Thinni, were “with companies NOC would not accept as counterparties, and could cost Libya billions of dollars in lost revenue if they were ever implemented.”

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Sanalla also warned Thinni against attempting further “irresponsible” port blockades, saying that “this will only bring further suffering to the Libyan people.”

Libya--exempt from OPEC’s output cut deal due to the political unrest—saw its oil production in May jump by 178,200 bpd over April, to stand at 730,000 bpd,, OPEC’s Monthly Oil Market Report showed on Tuesday.

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By Tsvetana Paraskova for Oilprice.com

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