The authorities rushed to evacuate people from their homes in the area along the road to the airport, where rival militias have been fighting each other for the past two weeks.
The depot, about 10 kilometres from the Libyan capital, caught fire yesterday when it was hit by rockets fired by the combatants, who are jostling for control of the airport.
Containing six million litres of fuel, the plant was burning steadily and the authorities feared the blaze could spread to a natural gas reservoir in the same plant, run by state-owned National Oil Corp, where 90 million litres are stored.
"Firefighters have been trying for hours to put out the blaze but to no avail. Their water reserves finally ran out and they've had to leave."
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He said the only option left was "intervention by air", as the government said several countries had offered to send fire-fighting aircraft in response to an appeal for international aid.
Fighting in the area has claimed the lives of 97 people and left more than 400 injured, according to the latest figures released by the health ministry.
An AFP photographer said projectiles had fallen close to the plant.
While the oil burns, in Tripoli itself motorists are suffering a severe petrol shortage, as service stations have closed over fears for the safety of staff in the light of the fighting.
As the lawlessness spreads, several countries, including Britain, France, Germany and Egypt have all warned their citizens not to travel to Libya, while the United States evacuated its embassy over the weekend.
Italy and Malta have sent aircraft in the past few days to the Miitiga military airport to airlift their nationals out of Libya.
The exodus of foreign workers will further hit the strife-torn country, while the health ministry warned of a shortage of medical staff after the Philippines announced it was withdrawing its citizens, including 3,000 doctors and other healthcare workers.
The Tripoli clashes, the most violent since a 2011 armed revolt which overthrew longtime dictator Moamer Kadhafi, started with a July 13 assault on the airport by armed groups, mainly Islamists.