The supply unit is Italian and, assuming Libya was not the last home country of an incompletely conquered Italy (e.g. Italy exist), at war with the Commonwealth. Supply units are land units, so the hex is occupied by an Italian land unit at war with the conqueror and should therefore stay in the hex with the hex under Italian control.
“WiF is like sex: sure, it may give some practical results, but that's not why we do it.”
- Richard P. Feynman, 'WiF, Sex, and the Dual Slit Experiment'.