Save for later Print Download Share LinkedIn Twitter An escalating dispute over the leadership of Libya's National Oil Corp. (NOC) is threatening to plunge the country's oil sector into further chaos, adding to the pressures on tight global oil supply.Libya's government of national unity said on Wednesday that it planned to replace NOC Chairman Mustafa Sanalla amid deteriorating relations between the company and the administration of Prime Minister Abdulhamid Dbeibeh in Tripoli.But Sanalla is refusing to step down, citing an abuse of power by the provisional government of national unity.The next 48 hours could determine whether Sanalla — who has powerful supporters — manages to cling to power in the face of growing hostility from Dbeibeh's administration or whether he is pushed out.The situation escalated on Thursday when a militia loyal to Dbeibeh from the western town of Misrata surrounded NOC headquarters in Tripoli after Sanalla made a withering speech against Dbeibeh the previous day.Dbeibeh is seeking to replace Sanalla with former Central Bank Governor Farhat Bengdara."It's vitally important under the current conditions that Libya regains its oil and gas export capacity as quickly as possible," Bengdara told reporters in Tripoli, according to a report by Agence France-Presse. "The oil sector has fallen prey to political struggles, but we will work to prevent political interference in the sector," he added. Breakdown in RelationsThe dispute coincides with a deterioration in Libya’s domestic stability and is seen as an attempt by Dbeibeh's struggling government to gain greater control over Libya's oil revenues, the lifeblood of the North African country's economy.His government is locked in a power struggle with a rival eastern administration, led by former Interior Minister Fathi Bashagha, with both vying for legitimacy.Libya’s parliament, the House of Representatives, which supports Bashagha, has rejected Bengdara's appointment as NOC's new chairman, as has the Higher Council of State, which advises the Presidential Council of Libya.Sanalla has refused to assist the Dbeibeh government in its attempts to gain control over the state company and, in turn, the oil sector and its vital revenues.The breakdown in relations between Dbeibeh and Sanalla started in March, says a former European defense attache and risk consultant, when the House of Representatives asked Sanalla to stop the flow of oil revenues to the central bank.Oil DisruptionUnrest erupted in Tripoli on Jul. 1 after a youth movement calling itself "Baltris Libya" called for protests against chronic power cuts and the political stalemate.Protests quickly spread across Libya, including the cities of Misrata, Zawia, Tobruk, Benghazi and Sebha.At the same time, militias upset with the Dbeibeh government shut down the oil ports of Es Sider and Ras Lanuf, roughly halving Libya's export capacity.Libya's oil output is currently hovering around 600,000-700,000 barrels per day, compared with prior levels of around 1.1 million b/d. NOC has lifted force majeure declarations at the eastern oil ports of Marsa al-Brega and Zueitina, but the restrictions remain in place at Es Sider and Ras Lanuf, which have a combined export capacity of some 560,000 b/d.Marsa al-Brega and Zueitina were reportedly shut down by protesters over pay, but it is believed they had political backing.The US government, worried about high oil prices, appears alarmed by the showdown, and Ambassador Richard Norland has voiced support for Sanalla.“We are following with deep concern developments surrounding [NOC] which is vital to Libya’s stability and prosperity and has remained politically independent and technically competent under the leadership of Mustafa Sanalla," Norland tweeted. Foreign InfluenceMeanwhile, foreign powers continue to exert influence on Libyan politicians and militias.In his speech, Sanalla accused Dbeibeh of being in an alliance with the United Arab Emirates (UAE).Dbeibeh is believed to have close ties to both the UAE's Abu Dhabi and Turkey. The UAE previously supported Gen. Khalifa Haftar’s Libyan National Army, but has offered only lukewarm support since Haftar’s failure to seize Tripoli in 2020.Historically, the Dbeibeh family enjoyed extensive commercial influence under the Qaddafi regime.