Libya's major El Sharara oilfield has ceased production after being seized by an armed group, oil ministry sources said on Wednesday, Reuters reported.
An oil worker at the large southern field said there was shooting, but no further details were available.
Hours after the initital attack, workers were still trapped inside company buildings. "We cannot leave," the worker said, asking not to be named. "There is shooting."
The field produced at least 200,000 barrels per day before the shutdown, the sources said.
The area near the field, which is deep in Libya's lawless south, has been the scene of fighting between members of the Tuareg and Tibu, two minorities who have complained about neglect and discrimination in the North African country.
Protesters have closed the field twice in the past 12 months to press authorities into accepting their financial and political demands.
Tuarag protesters closed the field in October, demanding a bigger local council representation and national identity cards needed to get full rights and state benefits.
The government had twice renegotiated the reopening of the field but state authority has eroded since summer when an armed group seized the capital, forcing the internationally recognised Prime Minister Abdullah al-Thinni to move to the east.
Western powers worry that Libya is heading toward civil war as authorities prove too weak to control former rebels who helped oust Muammar Gaddafi in 2011 but now defy state authority to grab power and a share of oil revenues.
The rapid return of Libyan crude oil to the market in recent months has added to a glut of crude that has driven down prices by more than 25 percent since June, though growing political instability has increased uncertainty over the country's levels of production and supply.
International benchmark Brent crude oil futures hit a fresh four-year low of $81.63 on Wednesday, before recovering on reports of a pipeline fire in Saudi Arabia and the El Sharara news.