Recent political developments may provide some optimism for Libya. General Khalifa Haftar, the charismatic leader in control of the country's eastern government in Tobruk, and Prime Minister Fayyez Serraj of the rival Government of National Accord (GNA) in the western city of Tripoli, last week agreed to support a UN plan to hold elections in early 2019.
The GNA is Libya's internationally-recognized government while Haftar's government is supported by the United Arab Emirates and Egypt and a number of militia groups. Technically, the two bodies are supposed to be united under the GNA, but they do not fully recognize one another and thus make their own laws regardless of joint consensus.
"Long-term oil production will likely continue to rise as a political agreement would facilitate more investment in oil fields," the consultancy firm Eurasia Group said in a research note last week.
While previously opposed to elections, Haftar is believed to be more supportive of early elections to take advantage of his heightened popularity vis-a-vis Serraj. Elections are likely to be complicated, however, and the extent to which all stakeholders and factions in Libya accept the results is far from certain.
Under Haftar's control is the "oil crescent" in eastern Libya's Gulf of Sirte, which holds four major ports that comprise the lion's share of the country's oil exports. Exports from the four ports under Haftar's control are Libya's main source of much-needed hard currency.
A return to an electoral process will help in restoring legitimacy to the political system, as well as enable the reunification of institutions and security forces, said Sarah Alshaalan, a Middle East and North Africa researcher at Eurasia Group. This means oil production will likely increase alongside improved confidence in Libya's political prospects.
Still, as Alshaalan said, the country remains in a state of civil war and under threat from terrorism. "Although recent violent outbreaks have not impacted oil production, pressure on oil refineries from Islamists or militias along with the threat posed by kidnappings and war-related damage to assets will present risks to any business willing to operate in the country."