Financial analyst Khaled Al-Zantouti wrote an article titled: The Possibility of Falling Oil Prices… What Should We Do?
In light of today’s global geopolitical shifts, we must carefully examine their impact on Libya. Regardless of our intellectual, political, or economic convictions, Libya remains our homeland and our shared refuge. The immense pressures on global oil markets greatly affect Libya. I consider our Libyan case unique within the so-called cartel of oil-producing countries. We are a producer whose output does not exceed 1.4 million barrels per day under any circumstances. Libya is a rentier state in every sense of the word—its sole resource is oil, which accounts for more than 93% of its income sources.
A country torn by division, with two entrenched governments, each with dozens of ministries, ministers, and hundreds of deputy ministers (some with genuine credentials, others forged). Beneath them are hundreds of public administrations, thousands of sub-departments, and millions of employees—perhaps as many as 2.5 million, counted among the living, the dead, the young, and the old. All receive salaries funded by oil revenues exceeding 75 billion dinars annually, equivalent to about 12 billion petrodollars.
Two points arise here, let’s speak plainly:
First, with such division, questionable competencies, and power-sharing arrangements, we will never be able to develop alternative income sources. Even if some attempt to think about it, no one can build an economic model to achieve diversification under these conditions.
Second, we face a harsh global reality: we have the highest number of employees worldwide, the lowest productivity, and rank among the most corrupt and mismanaged. The public sector consumes over 55% of oil revenues in salaries alone, based on current prices (around $66 per barrel). This excludes subsidies, smuggling, “chapter three” allocations, perks for the “honorable and distinguished,” their private jets, foreign missions, and luxurious housing—not to mention our diplomats, chargés d’affaires, and attachés abroad. Our embassies outnumber and outstaff even those of the U.S. and China! All this is sustained by oil, without sustainable development.
This means if oil drops just $10, we would face deficits of billions. How would we cover that? Specialists have recently asked this same question: How will we finance the deficit? Some suggested dollar-denominated borrowing from markets or international institutions like the IMF and World Bank. Discussing this problem, its causes, and solutions is not intellectual luxury—it is an urgent necessity. Thanks are due to those who raised it. It is perhaps more critical than floating the dinar.
Oil prices fluctuate due to one main factor: supply. Supply increases either when producers fail to agree (within OPEC+) or when they agree—sometimes under political pressure—to raise output, as happened recently. Over the past decade, oil prices have swung dramatically. For instance, by the end of 2015, oil fell to $30 per barrel due to just a 3 million barrel oversupply. During the COVID crisis, Brent dropped to record lows.
In the past year—from October 2024 to early September 2025—Brent fell from $84 to about $66, a 20% decline. The U.S. has declared its target range to be $50–60. Current statistics show more than 2 million barrels of surplus supply in the market. One setback—say, Russia exiting OPEC+ under U.S. pressure—could increase Russian and Saudi output by millions of barrels per day. Even a sudden U.S. announcement of rising oil inventories could trigger sharp declines.
Technical analysis shows the first support level is around $65. If broken downward, the next support is $61. If that is breached, Brent could fall below $55 per barrel. And that is the real fear: What do we do then?
Options:
- Draw on reserves.
- Borrow—either through dollar bonds or the IMF.
- Print money in 100, 500, or even 1,000 dinar notes.
- Halt luxury imports, restrict letters of credit, personal transfers, and more.
Every option is bitter medicine.
The easiest may be using reserves, but this threatens our future ability to meet even basic needs. Forget the “120 days of imports” rule—it applies to diversified economies. Draining reserves would leave us with no cushion for essential spending, as we lack any alternative income sources.
Issuing dollar-denominated bonds is nearly impossible, as we are not credit-rated. Even if we were, we’d score no higher than a “D”—the lowest possible grade, signaling extreme risk. This makes international borrowing impossible. At best, we could issue local CDs in dinars, but that would not solve our hard-currency needs, though it could help manage some local obligations.
Turning to the IMF and World Bank is possible (putting conspiracy theories aside), but their typical prescriptions come with harsh conditions. Can we bear them?
Printing money is the other option, but that would flood the economy with inflated dinar notes—100s, 500s, even 1,000s—and drive us into deadly hyperinflation.
If oil falls below $60, the situation will be very difficult—painful, with few alternatives.
So, lawmakers and executives—of all factions and governments—should we not stand before God Almighty, declare unity, end our divisions, and work together to rebuild our wounded nation? Let our first goal be to fight corruption wherever it exists, eradicate it, and rebuild Libya with the hands and expertise of its own sons.
