The ongoing political division and armed conflict in Libya have overshadowed the critical stage Libyan economy has reached. Libya’s only source of income, oil exports, became an integral dimension of the political and military conflict. Over the past two years, Libya’s oil production was reduced to levels that can hardly sustain the Libyan state. However, the political divisions and its impact on oil export are not the only problem. Any attempt of economic reform in Libya must address the structural faults that emerged as a result of Libya’s total dependence on oil revenues. Reforming the Libyan economy could be used in turn as a tool to bring about political stability.