Production tumbled further over the weekend, to 230,000 barrels a day—compared with 1.4 million barrels just last summer—after renewed protests forced a shutdown at the El Sharara oil field deep in the Murzuq Desert, in the southwestern part of the country.
The field is operated by Akakus Oil Operations, a joint venture of Libya's state-owned NOC, Spain'sRepsol YPF, Austria's OMV and France's Total.
Those problems are on top of disruptions in the east.
"There is a structural political issue with the eastern provinces that is preventing exports from that region, but the government is so weak that it cannot even sustain production in the west of the country," Olivier Jakob, managing director of Swiss research firm PetroMatrix, told CNBC.
(Read more: Why US regulators go easier on nat gas than pipelines)
In January, an earlier standoff with protesters was claimed to be resolved, bringing some of the dilapidated oil infrastructure back online to produce 500,000 barrels a day. Revenue from oil exports is crucial to the government's budget, and the shortfall has already triggered a series of spending cuts.
At the core of the dispute are demands in the east for greater political autonomy and a larger allocation of the state's oil revenue.