The first oil licensing round in Libya since the overthrow of the late leader Muammar Gaddafi in 2011 marked a notable return — or expansion — of major Western oil companies, in what was seen as a significant success for Tripoli. As part of the National Oil Corporation’s plan to raise production to two million barrels per day by 2028, Libya announced last year the offering of 22 onshore and offshore blocks in its first bid round.

Among the most prominent winners was US-based Chevron, which was awarded Area 106 in the oil-rich Sirte Basin, marking its return to the country after a 16-year absence. Other major Western companies secured new concessions as well, including Italy’s ENI, Spain’s Repsol, Hungary’s MOL Group, in addition to QatarEnergy. The key question, however, remains: does this signal the beginning of a new chapter for Libya, or is it merely a fleeting moment of optimism?

What fuels optimism is not only the breadth of Western companies expanding their footprint in Libya, but also the nature of these firms. The oil and gas sector occupies a unique position in global business, as companies operating abroad are often granted substantial operational autonomy — in legal terms, somewhat comparable to embassies, which are treated as sovereign territory wherever they are located.

Under international law, foreign oil and gas companies are permitted to deploy appropriate security personnel and infrastructure to protect their investments, subject to host government approval — which is typically granted. As a result, the gradual expansion of major oil companies’ presence can be one of the most effective tools for building political influence in a foreign state.

The British East India Company is frequently cited as an early and prominent example of this model. Founded in 1600, it expanded British influence across large parts of Asia over nearly 300 years, including India and Hong Kong, supported at one point by a British security force of roughly 260,000 men. Its expansion was self-financed through commercial profits — a model that some Western powers have sought to replicate in modern forms elsewhere.

In recent years, major Western oil and gas companies have led US and European efforts to rebuild influence in the Middle East, particularly after the United States unilaterally withdrew in 2018 from the Iran nuclear agreement (the Joint Comprehensive Plan of Action). That withdrawal created space for China and Russia to expand their footprint through Iran and across what is often referred to as the “Shia Crescent,” encompassing Iraq, Syria, and Lebanon, and extending toward former Western allies such as Saudi Arabia and the UAE.

During the second term of President Donald Trump, pressure on Iran intensified, indirectly targeting both China and Russia as well. Another factor has been Europe’s loss of Russian oil and gas supplies following Russia’s 2022 invasion of Ukraine, which strengthened the need for new exploration and development opportunities in the Middle East.

Leading this effort are companies such as Chevron, ConocoPhillips, and ExxonMobil from the United States; BP and Shell from the United Kingdom; TotalEnergies from France; ENI from Italy; and Repsol from Spain. QatarEnergy’s participation in a consortium with ENI in Libya highlights the country’s potential role as a key supplier of liquefied natural gas to Europe in the post-Ukraine war era, particularly given its designation as a major non-NATO ally.

Despite ongoing civil conflict since 2011, Libya retains substantial oil and gas potential. Before Gaddafi’s fall, production stood at around 1.65 million barrels per day of high-quality light crude sought after in Mediterranean and northwest European markets. The country also holds Africa’s largest proven oil reserves, estimated at roughly 48 billion barrels.

Prior to Gaddafi’s removal, production had been rising compared to approximately 1.4 million barrels per day in 2000, though still below the late-1960s peak above 3 million barrels per day. At the time, the National Oil Corporation planned to implement enhanced oil recovery techniques to boost output from mature fields, with expectations of adding about 775,000 barrels per day in capacity.

During the height of the civil war, production collapsed to around 20,000 barrels per day. Although output has since recovered to roughly 1.3 million barrels per day — its highest level since mid-2013 — politically motivated shutdowns have at times pushed production down to just above 500,000 barrels per day.

Libya also plans to expand natural gas production to become a significant supplier to Europe by the early 2030s, targeting output of approximately one billion standard cubic feet per day and beginning shale gas drilling in the second half of this year.

Some observers argue that the growing presence of major Western companies in Libya could, over time, help encourage a broader peace process, particularly as it draws greater political attention from Washington, London, Paris, and Brussels. However, the fundamental cause of repeated oil shutdowns since 2020 remains unresolved.

Field Marshal Khalifa Haftar, commander of the Libyan National Army, linked the September 18, 2020 ceasefire agreement with the UN-recognized Government of National Accord to a long-term resolution of oil revenue distribution. He proposed forming a joint technical committee to oversee oil revenues, ensure fair resource allocation, monitor implementation of the agreement, and prepare a unified budget addressing the needs of all parties, with the Central Bank of Libya required to execute approved payments without delay.

None of these arrangements, however, has been implemented, and no serious negotiations are currently underway to resolve them. While expanded Western economic interests may eventually support such reforms, Libya’s long-term stability will remain uncertain unless the underlying political and financial disputes are fundamentally addressed.

Bitcoin declined on Wednesday, extending its recent losses, amid caution ahead of key US economic data and expected comments from the Federal Reserve, which kept investors largely away from high-risk assets such as cryptocurrencies.

The world’s largest cryptocurrency received little support from a disclosure by Strategy Inc. — the largest institutional holder — of additional purchases, while dip buyers remained cautious after Bitcoin fell about 50% from its record high reached in October.

Bitcoin fell about 1% to $67,746.6 as of 01:19 ET (06:19 GMT).

Strategy buys $168 million worth of Bitcoin

Strategy said on Tuesday that it purchased 2,486 Bitcoin for $168.4 million over the past week, bringing its total holdings to 717,131 coins.

The purchase was made at an average price of $67,710 per coin, slightly below current price levels.

The deal marks the company’s third Bitcoin purchase in February, with the latest acquisition funded through additional share issuances.

The company had said earlier this week that it can withstand a Bitcoin price drop to $8,000 and still meet its debt obligations.

However, those statements — made after a prolonged decline in Bitcoin prices — drew criticism over potential shareholder dilution, especially if the company continues issuing new shares to fund further coin purchases.

Strategy has become a key concern for Bitcoin investors, amid fears that continued price declines could force it to sell part of its large holdings to cover financial obligations.

Altcoins trade in a narrow range

Broader cryptocurrency prices moved in a narrow range on Wednesday, while most altcoins continued to post sharp losses in recent sessions, with sentiment toward the sector remaining weak.

Market caution also increased ahead of a batch of key US economic indicators, most notably the minutes of the Federal Reserve’s January meeting due later today.

Industrial production data are due Wednesday, trade data on Thursday, and the Personal Consumption Expenditures price index — the Fed’s preferred inflation gauge — on Friday.

These releases, along with the meeting minutes, will be closely examined for further clues on the interest rate path.

Cryptocurrency markets are sensitive to US rate expectations due to their speculative nature and reliance on a loose monetary environment.

US President Donald Trump’s nomination of Kevin Warsh to lead the Federal Reserve triggered sharp sector losses earlier in February, as he is viewed as less inclined toward monetary easing.

In trading, Ethereum — the second-largest cryptocurrency — rose 1.1% to $2,003.20, while XRP gained 0.2% to $1.4814.

Oil prices rose by about 3% on Wednesday after peace talks between Ukraine and Russia in Geneva ended just two hours after they began, in what Ukrainian President Volodymyr Zelensky described as “difficult.”

Brent crude futures climbed by $1.85, or 2.7%, to $69.27 per barrel by 12:27 GMT, while US West Texas Intermediate crude rose by $1.78, or 2.9%, to $64.11.

After the talks concluded, Zelensky accused Russia of deliberately trying to slow progress toward an agreement to end the four-year war.

For his part, Russia’s chief negotiator Vladimir Medinsky said the talks were difficult but conducted in a businesslike atmosphere, adding that a new round will be held soon.

The US-mediated talks in Switzerland came as US President Donald Trump twice signaled in recent days that their success depends on Ukraine taking steps to ensure progress.

In a related development, Hungary announced it has halted diesel shipments to neighboring Ukraine and will not resume them unless Kyiv restores crude oil flows to Hungary through the Druzhba pipeline, Foreign Minister Peter Szijjarto said on Wednesday.

Recent weeks have seen disruptions in Russian oil supplies passing through Ukraine to Slovakia and Hungary, which Kyiv attributes to a Russian attack that took place on January 27.

Progress in US–Iran talks

Oil prices had fallen on Tuesday after Iran and the United States reached an understanding on “guiding principles” in talks aimed at resolving their long-running nuclear dispute, although that does not mean a final agreement is close, according to Iranian Foreign Minister Abbas Araqchi.

As the talks began on Tuesday, Iranian state media reported that Tehran temporarily closed parts of the Strait of Hormuz — a vital route for global oil supplies — citing “security precautions” during Revolutionary Guard military exercises there.

State media later said the strait was closed for only a few hours, without clarifying whether it had fully reopened.

Bjarne Schieldrop, chief commodities analyst at SEB, said in a note: “Iran now understands Trump’s negotiating tactics, and also knows that disrupting oil exports through the Strait of Hormuz and sending prices to $150 per barrel is the last thing Trump wants.”

He added: “Iran has plenty of time to negotiate calmly.”

The semi-official Fars news agency reported that Iran and Russia will hold joint naval drills in the Sea of Oman and the northern Indian Ocean on Thursday, days after Revolutionary Guard exercises in the Strait of Hormuz.

Political consultancy Eurasia Group said in a note to clients on Tuesday that it sees a 65% probability of US military strikes against Iran by the end of April.

US inventory data awaited

Investors are awaiting the weekly reports from the American Petroleum Institute later on Wednesday, along with data from the US Energy Information Administration — the statistical arm of the Energy Department — due on Thursday.

A Reuters survey showed analysts expect US crude oil inventories to have risen last week, while distillate and gasoline stocks are likely to have declined.

The US dollar held firm on Wednesday as geopolitical risks kept markets in a cautious mood, while investors awaited the minutes of the Federal Reserve meeting for signals about the future path of interest rate cuts.

The yen stabilized after data showed an improvement in Japanese manufacturing sentiment, alongside an announcement by US President Donald Trump regarding the first batch of major Japanese investments planned inside the United States.

The New Zealand dollar was the most active currency in Asian morning trading, as sellers moved into the market after the Reserve Bank of New Zealand kept interest rates unchanged and confirmed that monetary policy would need to remain in an accommodative range.

The bank’s stance reflects the continued fragility of the South Pacific nation’s economy.

Financial markets also continued to closely monitor geopolitical developments after Iran announced progress in nuclear talks with the United States in Geneva, while peace negotiations between Ukraine and Russia continued.

Samara Hammoud, currency strategist at Commonwealth Bank of Australia, said in a note:

“Risk appetite weakened due to concerns over renewed geopolitical tensions in the Middle East and volatility in US equity markets, which provided temporary support for the US dollar.”

She added: “However, reports that the United States and Iran made progress and reached a ‘general framework’ during nuclear negotiations in Switzerland helped calm those fears.”

Iran and the United States reached an understanding on the main “guiding principles” during a second round of indirect talks on the nuclear dispute on Tuesday, although a final agreement is not imminent, according to Iranian Foreign Minister Abbas Araqchi.

In Geneva as well, Ukrainian and Russian negotiators concluded the first day of US-mediated peace talks, which run for two days, as Trump presses Kyiv to move quickly toward a deal to end the four-year conflict.

With many Asian markets closed for Lunar New Year holidays, investors are waiting for the latest Federal Reserve meeting minutes and key US economic data for fresh trading catalysts.

The Federal Open Market Committee is scheduled to release the January meeting minutes later on Wednesday, while the Commerce Department will issue the preliminary estimate of US fourth-quarter GDP on Friday.

The dollar index, which measures the US currency against a basket of peers, was steady at 97.16 after two days of gains, while the euro slipped 0.06% to $1.1846.

The yen held at 153.23 per dollar, while the British pound fell 0.07% to $1.3558 after dropping 0.5% in the previous session.

Earlier data showed Japanese exports rose for a fifth straight month in January, while the Reuters Tankan survey offered some support for a slowing economy, with manufacturer confidence improving in February for the first time in three months.

The International Monetary Fund urged Japan to continue raising interest rates and avoid further fiscal easing. The Trump administration also announced three projects worth $36 billion to be financed by Japan, representing the first tranche of a roughly $550 billion project package approved by Tokyo to reduce US tariffs.

The Australian dollar fell 0.1% against its US counterpart to $0.7076, while the New Zealand dollar dropped 0.4% to $0.6016.

The Reserve Bank of New Zealand kept its key interest rate unchanged at 2.25% in the first meeting chaired by Governor Anna Brehmer, with policymakers stressing that the monetary stance must remain accommodative to support the economic recovery.

In cryptocurrency markets, Bitcoin fell 0.7% to $67,167.14, while Ethereum declined 1.15% to $1,976.18.