The US embassy says it is following developments "with deep concern" and stresses that the National Oil Corporation is vital to Libya's "stability and prosperity".

Libya's National Oil Corporation has largely stayed neutral despite years of division.
Libya's National Oil Corporation has largely stayed neutral despite years of division. (Reuters)

Libya's government has replaced the head of the key National Oil Corporation in a dramatic move that prompted the United States to warn against any "armed confrontation" over the sector.

The North African country's vast oil reserves have often been at the heart of political disputes, but the NOC had largely stayed neutral despite years of division since the 2011 toppling of Muammar Gaddafi.

However, in a decree made public on Wednesday, the unity government of Abdulhamid Dbeibah appointed former central banker Farhat Bengdara to replace NOC head and veteran technocrat Mustafa Sanalla.

On Thursday morning, Bengdara took up office at NOC headquarters in Tripoli, where he held a news conference.

"It's vitally important under the current conditions that Libya regains its oil and gas export capacity as quickly as possible," he told journalists.

"The oil sector has fallen prey to political struggles, but we will work to prevent political interference in the sector."

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'Vital' to stability

Dbeibah's move against Sanalla follows months of rising tensions in Libya after the country's eastern-based parliament appointed a rival government, led by former interior minister Fathi Bashagha and seen as backed by warlord Khalifa Haftar.

Dbeibah has refused to cede power before elections, and Bashagha has so far failed to take office in Tripoli, raising fears of renewed conflict just two years after a landmark truce ending an attempt by Haftar to seize the capital by force.

The US embassy said on Thursday it was following developments "with deep concern" and stressed that the NOC was vital to Libya's "stability and prosperity".

Since April, pro-Haftar militias have blockaded key eastern oil facilities to put pressure on Dbeibah.

As a result, Libya's crude and condensate exports have fallen from around one million barrels per day in March to just over 400,000 so far in July, according to data intelligence firm Kpler.

The blockade has also contributed to crippling power shortages that sparked angry protests earlier this month.

The blockade also comes amid a supply crunch on global oil markets, rattled by the Ukraine situation, in turn prompting consumer nations to pressure other producers to ramp up output.

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Source: AFP