Libya’s power divisions could once more fracture its oil output – as markets question for how long

A political standoff in Libya risks once more paralyzing the north African country's lucrative oil sector — but the frequency of its power tussles and crude disruptions have called long-term oil price support into question.

Politically fractured since the NATO-backed ousting of Moammar Gadhafi, Libya once more finds itself mired in conflict between the internationally recognized Tripoli government of Abdul Hamid Dbeibah and its eastern Benghazi-based rival administration endorsed by Libya's highest legislative body, the House of Representatives. Hanging over them is the specter of eastern warlord Khalifa Haftar, whose allied forces safeguard and control most of the country's oilfields.

Tensions recently spiked once more over the fate of oil revenues, as efforts by Dbeibeh to remove Central Bank Governor Sadiq al-Kabir prompted the Benghazi administration to announce the shutdown of oilfields.

Libya's National Oil Corporation (NOC), which administers the country's hydrocarbon resources, has yet to comment on the announced closures, but its subsidiary Waha Oil has acknowledged "protests and pressures could lead to the cessation of oil production," according to a Google-translated statement.

Fellow subsidiary Sirte Oil cited the same reasons for having to "gradually reduce production" and urged "specialized authorities to intervene to preserve the continuity of oil production" in a Google-translated social media post.

Libyan sources who could only comment anonymously because of security concerns told CNBC that several fields have fully shut down or reduced crude production.

Prior to the latest escalation, Libya's largest field, the 300,000 barrels-per-day El Sharara, was shut down in early August amid protests orchestrated by