Libya’s fuel-smuggling economy has moved well beyond leakage and petty diversion. It is now a structured parallel system tied into the state’s own operating channels, with both eastern and western power centers benefiting. As we have repeatedly said, this is the fake stability that keeps the country from erupting into civil war again. 

The revenue loss (north of $20B from 2022-2024) tracks with the period when refinery runs, allocation schedules, and tanker dispatches were repeatedly adjusted in ways that created excess product on paper and predictable diversion points in practice. The change in NOC leadership earlier this year did not change this: The networks were already embedded across refinery management, depot control, coastal security units, and the shipping intermediaries that move product through Malta and Tunisia.

The eastern apparatus around General Khalifa Haftar has expanded its role, particularly through the desert corridors feeding southern markets and the coastal routes near Tobruk and Hariga. Western groups around Zawiya and Zuwara continue to dominate short-haul refined-product runs into the central Mediterranean. The same vessels, brokers, and front companies that have circulated through previous investigations remain active, suggesting the system is stable, insulated, and comfortable operating under Libya’s fragmented oversight.

Inside Libya, we’re looking at major fuel shortages, growing subsidy pressure, and a widening gap in dollar…

Libya’s fuel-smuggling economy has moved well beyond leakage and petty diversion. It is now a structured parallel system tied into the state’s own operating channels, with both eastern and western power centers benefiting. As we have repeatedly said, this is the fake stability that keeps the country from erupting into civil war again. 

The revenue loss (north of $20B from 2022-2024) tracks with the period when refinery runs, allocation schedules, and tanker dispatches were repeatedly adjusted in ways that created excess product on paper and predictable diversion points in practice. The change in NOC leadership earlier this year did not change this: The networks were already embedded across refinery management, depot control, coastal security units, and the shipping intermediaries that move product through Malta and Tunisia.

The eastern apparatus around General Khalifa Haftar has expanded its role, particularly through the desert corridors feeding southern markets and the coastal routes near Tobruk and Hariga. Western groups around Zawiya and Zuwara continue to dominate short-haul refined-product runs into the central Mediterranean. The same vessels, brokers, and front companies that have circulated through previous investigations remain active, suggesting the system is stable, insulated, and comfortable operating under Libya’s fragmented oversight.

Inside Libya, we’re looking at major fuel shortages, growing subsidy pressure, and a widening gap in dollar liquidity whenever smuggling volumes rise. Import requirements have increased even though domestic demand is flat, which only confirms how much subsidized product is being stolen. There is no alignment between refinery balances and reported export flows, and now the NOC is going to have difficulty justifying its data.  

It’s all smoke and mirrors, and denunciations of smuggling by both governments should not be taken seriously. It’s the only thing keeping them in power. Most blame it on “organized crime”, which is true at the core (governments can be organized crime cartels), but this is institutional corruption. 

International oil and gas companies tolerate this because their primary exposure is upstream, not with refined products, where the bulk of the corruption occurs. Otherwise, these barrels remain highly attractive, the geology is solid, and Libya can deliver crude at relatively low cost when fields are stable.

That doesn’t mean there aren’t any blind spots for foreign operators, but they’re treating it as the cost of doing business. The problem is that this smuggling network can overlap with the same actors responsible for protecting the pipelines and export terminals. Any crackdown on smuggling, which is only likely if one side starts to feel they are benefitting less, would break this system and lead to actions we’ve seen before, like a blockade of exports.