Trump administration plan to use Libyan oil as an Iran-war Gulf alternative faces setbacks after assassination, leadership shake-up

The Trump administration’s effort to widen Libyan oil production as a hedge against disruption during the war with Iran is encountering fresh obstacles, according to a report Sunday from The Washington Times.

The plan, described as part of the administration’s “Iran-war” risk management and aimed at increasing Gulf-area supply options, has been thrown into uncertainty by a recent assassination in Libya and by turmoil within the country’s financial leadership, the report said. The article also tied the setbacks to ongoing security pressure, citing a week of drone strikes and explosions that carried into Sunday.

In parallel with the security shocks, the report said a central banker in Libya moved to quit, an action that would raise questions about financial stability and the functioning of institutions needed to support any rapid changes to energy output, contracting, and payment systems. The combination of an assassination and leadership disruptions is particularly relevant for energy projects that depend on predictable governance and secure logistics, the report suggested.

While the administration’s stated goal is to diversify where oil is sourced to reduce reliance on a limited set of routes during the conflict with Iran, the report characterized Libya’s current environment as unstable. Over the past week, drone strikes and explosions have intensified uncertainty around operations and infrastructure, with the article describing the disturbances as continuing through Sunday.

The report framed the setbacks as putting the “oil-hedge” approach on the rocks, underscoring that expanding access to Libyan barrels during a high-tension international period requires more than diplomatic intent. It also requires secure facilities and transport, continuity in the institutions that manage funds and approvals, and basic public-order conditions that can support commercial and regulatory execution.

For now, the administration’s timeline and practical ability to convert the Libyan supply concept into additional, usable volumes remain unclear in the face of the reported assassination, the central banker’s exit, and continuing attacks. Any next steps would likely depend on whether security conditions improve and whether Libya’s financial leadership and control mechanisms stabilize enough to support energy-sector commitments.