Libya’s crude output is the highest for three years, but the government says it may declare force majeure at two oil terminals, while state power company GECOL has warned of an imminent nationwide power blackout.

The welcome news that Libya’s oil production has surpassed 700,000 b/d has been tempered by a warning from the state electricity company that the country could be on the verge of a total blackout, and by a government statement saying that its efforts to combat smuggling...