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The fire that resulted from the militant bombing of a pipeline at the Sarir oil field, the largest in Libya, was extinguished during the weekend. Sarir is in the same region as oil fields attacked last week by fighters claiming loyalty to the group calling itself the Islamic State.

Libya before NATO forces intervened to protect civilians from attacks by forces loyal to former leader Moammar Gadhafi was producing around 1.2 million barrels of oil per day. In its monthly report for February, the Organization of Petroleum Exporting Countries said member-state Libya was producing around 343,000 bpd as of January, a 27 percent decline from December. Sarir was producing around 185,000 bpd.

U.S. Ambassador to Libya Deborah K. Jones wrote in the Tuesday edition of the Libya Herald the country may go broke if oil continues to get caught in the cross fire.

"Disruptions to Libya's oil production, essentially the country's only source of income, have become so severe that Libya will be broke in 18 months or less, by some counts," she wrote.

Libya was once a major international oil supplier. War in 2011 prompted members of the International Energy Agency to tap into strategic reserves to cope with the loss of oil from the North African producer.

Michael Marseille, president of Italian oil trade union FederPetroli Italia, said Italy, a net-importer, is at risk because of the conflict spillover.

"The situation is out of control," he said in an e-mailed statement. "All fields, both onshore and offshore, we believe are at risk."

The Libya economy boomed in the wake of Gadhafi's late 2011, but shrank by 10 percent two years later, the World Bank said.

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Libya's oil economy at risk, envoy says