Foreign Policy Blogs

Libyan Rebels Send First Shipment of Oil

Wednesday, a Liberian-flagged tanker sailed out of Libya’s northeastern port of Marsa al-Hariga carrying one million barrels of oil. At spot prices, this means the cargo is worth $100 million. This represents a significant milestone for the anti-Khadafy forces based in and around Benghazi in the east (formerly known as Cyrenaica). Symbolically, this provides greater legitimacy to the would-be regime. In more practical terms, $100 million will buy a lot of arms, food and other supplies in the cash-and-carry business that is the international arms trade.

Qatar, which has recognized the rebel leadership as the government of Libya, is helping to market the oil. A new bank account has been established to receive the funds, and Mustafa Gheriani, speaking on behalf of the rebel leadership, said, “We will use the money to buy food, medicines and weapons. We are now producing from 100,000 to 130,000 barrels of crude a day and we hope, under the new deal with Qatar, to increase the output to 300,000.” That would mean $30 million a day.

The EU has accepted the legality and practicality of buying oil from the rebels. Michael Mann, spokesman for the EU’s foreign affairs chief, Catherine Lady Ashton, stated, “If the revenues don’t reach the Khadafy regime, we have no issue with commercial dealings in Libyan oil and gas and they should be regulated by normal trade practices.”

Despite the freezing of his assets, Colonel Khadafy still holds a financial advantage over the rebels. However, this shipment will start to balance the equation. Moreover, the oil trade is a zero sum game for the two factions – what one sells, the other cannot. Not only does this shipment add $100 million to the rebel war chest, it also denies $100 million to the colonel.



Jeff Myhre

Jeff Myhre is a graduate of the University of Colorado where he double majored in history and international affairs. He earned his PhD at the London School of Economics in international relations, and his dissertation was published by Westview Press under the title The Antarctic Treaty System: Politics, Law and Diplomacy. He is the founder of The Kensington Review, an online journal of commentary launched in 2002 which discusses politics, economics and social developments. He has written on European politics, international finance, and energy and resource issues in numerous publications and for such private entities as Lloyd's of London Press and Moody's Investors Service. He is a member of both the Foreign Policy Association and the World Policy Institute.