Central bank bottlenecks and massive import costs delay the impact of the $4B windfall.
War-torn Libya is pumping oil at the fastest pace in more than a decade, averaging about 1.4 million barrels a day in April, according to operating data from the National Oil Corporation.
Still, refining capacity, distribution networks and subsidy-financed imports remain strained by years of institutional division since the 2011 conflict, when output fell from about 1.5 million barrels a day during the civil war to near-collapse levels.
The imbalance reflects Libya’s fragmented downstream system, where crude exports continue but refining capacity, distribution networks and subsidy-financed imports remain strained due to institutional disruption since the 2011 uprising and the ouster of longtime dictator Muammar Gaddafi, when production fell sharply.
Tracking Libya’s hydrocarbon windfall
State-owned NOC reported $2.82 billion in gross oil revenues in April, followed by a rise of nearly $4 billion in May, the highest monthly income in 10 years, according to local energy reports citing official figures. Crude flows through the Es Sider, Ras Lanuf and Zawiya terminals to Mediterranean markets, where it is priced against a Brent-linked benchmark.
However, converting strong production and upstream earnings into direct benefits to the state and its people remains challenging.
The surge in May coincided with a sharp increase in fuel imports; NOC Chairman Massoud Suleiman confirmed the contract for 17 gasoline tankers, the highest monthly fuel import volume in Libya’s history. Despite increased import activity, several cities in western Libya reported fuel shortages and long queues at filling stations, highlighting persistent disruptions in domestic deliveries.
The cash conversion of oil income is still structurally uneven. In April, only $1.91 billion of $2.82 billion in gross revenues after fuel-import and settlement deductions reached Libya’s Central Bank through the Libyan foreign bank mechanism. This leaves approximately $910 million stuck in upstream settlement layers awaiting final transfer to the sovereign liquidity system.
Amid persistent import financing pressure on food, fuel and industrial inputs, the central bank on June 3 launched a $3.5 billion foreign exchange allocation program to cover letters of credit (LOC), foreign transfers and retail foreign exchange demand, according to Libya’s financial disclosures.
Central Bank at the center of the fiscal fault line
The central bank sits at the center of this fiscal round. It is the sole legal recipient of hydrocarbon revenues and converts the flows into domestic liquidity for salaries, imports and foreign exchange allocation, making it the clearinghouse for the national economy.
That role has repeatedly placed it at the center of political excitement. Last August, a dispute over central bank leadership led to production shutdowns in the eastern part of the country, causing output to drop from about 959,000 barrels per day to 591,000 barrels per day, according to NOC data. The United Nations Assistance Mission in Libya warned that disruption to the central bank’s clearing operations would halt LOCs and salary payments, noting that hydrocarbons account for more than 90% of export earnings.
The underlying political structure is divided between the UN-backed National Unity Government in Tripoli and the Government of National Stability based in Benghazi and Tobruk in the east; UN mediation continues, but national elections are stalled. However, a rare change occurred on 11 April, when rival eastern and western legislative bodies signed a historic agreement to unify public spending, creating Libya’s first consolidated budget framework since 2013.
Withdrawal of big foreign companies due to political risk persisting
Production continues to improve. Libya targets 1.6 million barrels per day by the end of 2026, supported by the rehabilitation of mature fields in the Sirte and Murzuq basins and incremental drilling profits.
Investment is also returning in a big way.
In February, Libya awarded oil and gas exploration licenses for the first time in 17 years, awarding acreage to Chevron, Eni, QatarEnergy and Repsol, along with other global operators competing for the Sirte, Murzuq and offshore Mediterranean blocks. The round followed broad upstream agreements involving TotalEnergies and ConocoPhillips, BP, Shell and ExxonMobil, signaling new international exposure to Libya’s estimated 48.4 billion to 50 billion barrels of proven reserves, the largest in Africa.
Analytics firm Geopolitical Desk says Libya’s obstacle is now fiscal rather than geological; Production has stabilized, but “fund flows remain irregular, procurement cycles are disrupted, and fiscal authority is competing in parallel administrations.”
The result is a scenario where record production, rising revenues and partial political coordination co-exist with fragmented financial execution, ensuring that Libya’s oil recovery is measured in barrels but limited in its ability to fully translate into state power.