Event

A huge fuel depot was set on fire by a missile strike in Tripoli on 28 July. A few weeks earlier, violent and deadly confrontations over the control of Tripoli’s international airport had already resulted in the closure of the airport and the suspension of international flights into Libya, forcing the United Nations and different countries to withdraw staff and call up citizens to leave the country. Not only in Tripoli have militias clashed, also in Benghazi, Libya’s second largest city located in the east of the country, more deadly clashes were reported between forces aligned with Khalifa Haftar, a retired general, and pro-Islamist militias. Libya also saw its oil production increase last month, upon an agreement between the government in Tripoli and rebels in the east who had occupied important oil export terminals over the past year. Oil production was  reportedly around 500,000 barrels per day (bd), more than twice the average oil production in recent months, but only a third of post-revolutionary peak production.

Impact on country risk

Clashes between armed militias have increasingly gotten out of hand in the past weeks, having hit energy facilities and bringing international airport traffic to a standstill. Even though the strong liquidity position of the country and the recent recovery of oil production provide for financial buffers, security and political problems are increasingly taking their toll. The new parliament, elected on 25 June, will convene for the first time in an emergency meeting this weekend. However, given the chaos the country is currently going through, the new parliament and government are probably not in a strong enough position to tackle Libya’s security or more institutional problems soon. This would result in a further strengthening of Credendo Group’s cover policy on the country.

Analyst: The Risk Management Team,  r.cecchi@credendogroup.com