According to the Wisdom Financial APP, negotiations on the crisis at the Libyan Central Bank, led by the United Nations, have resumed after nearly two months of destructive crude oil blockade, which has led to a significant drop in crude oil production in this OPEC member country. It is understood that Elhadi El-Saghir, a member of the Libyan Parliament, informed the media that representatives of the eastern and western administrative authorities of the country will attend the negotiations in Tripoli on Wednesday.

It is understood that since mid-August, the opposing factions of the Libyan government have been in a state of dispute. The UN-recognized Libyan government in the capital Tripoli took action to replace the Central Bank governor, Saddek Kabir, who manages the billions of dollars of oil wealth in this North African country. However, the authorities in the eastern region of Libya rejected this demand and ordered the shutdown of all crude oil production and exports. It should be noted that the eastern region is where a significant portion of Libya's oil is extracted.

Within weeks of the start of the crude oil blockade by the opposing factions in Libya, the daily production of the country with the largest oil reserves in Africa plummeted from over 1 million barrels before the crisis at the Libyan Central Bank to around 0.45 million barrels. However, crude oil exports are still entering the global market through some exporters, and even saw a resurgence in the past week.

It is important to note that the resumption of crisis negotiations in Libya may not necessarily be bullish for oil prices in the short term. Before the negotiations resumed, due to the oil blockade announced by the eastern government, Libya's daily crude oil production dropped from over 1 million barrels to about 0.45 million barrels, impacting global supply, especially in the oil supply chain of OPEC member countries. However, with more Libyan oil inflow globally, there may be a minor rebound trend in Brent crude oil prices, which could have an impact as the influx of supply may weaken Brent crude oil prices. Brent crude oil has been persistently weak since the beginning of this year due to global high interest rates leading to weak demand, with prices currently showing almost no change from the beginning of the year.

Why does Libya have two governmental organizations? Why did it trigger a central bank crisis?

The biggest crisis in over four years in Libya has sparked intensive global mediation efforts, attempting to prevent this important OPEC member country from plunging back into civil war. Turkey and Egypt had supported opposing forces during the conflicts in 2019-2020 and are now pushing for a peaceful resolution for Libya's opposing government.

The country's two legislative institutions - the House of Representatives in the eastern city of Benghazi and the National Higher Commission in the capital Tripoli - theoretically agreed to jointly appoint a new leadership for the central bank. However, progress has been slow, and since September 12, both sides have not held any formal meetings.

The reasons for the two opposing governments in Libya can be traced back to the 2011 civil war, when the long-standing ruler of Libya, Muammar Gaddafi's regime was overthrown, leading the country into political chaos and power vacuum. Subsequently, Libya plunged into a struggle between different factions, forming multiple opposing governments and armed groups.

Eastern Government (Tobruk Government): Dominated by the House of Representatives, based in the eastern city of Benghazi, and supported by General Khalifa Haftar, leader of the Libyan National Army (LNA). This government is supported by countries including Egypt and the United Arab Emirates.

Western Government (Tripoli Government) is the internationally recognized Libyan government, known as the Government of National Accord (GNA), based in the capital Tripoli and supported and recognized by the United Nations. It is supported by countries like Turkey and Qatar.

The main disagreement between the two opposing governments in Libya regarding the Libyan Central Bank stems from the power struggle for control of the institution. The Central Bank controls the country's oil revenues and forex reserves, which are Libya's primary economic resources. Due to the central role of oil revenue in the Libyan economy, controlling the Central Bank means control over the national resources. The Western Government has tried to further consolidate control over the country's economic resources by replacing the Central Bank Governor Saddek Elkaber. The Eastern Government strongly opposes this move, considering its control over the Central Bank as illegal, and therefore declared a blockade on oil production and exports to pressure the Western Government.