NEW YORK: Oil prices rose by more than a dollar a barrel on Thursday as supply disruptions in Libya and plans to lower output in Iraq raised concerns of a tightening market.
US West Texas Intermediate crude futures were up $1.35, or 1.8%, to $75.85 a barrel by 12:01 p.m. EDT (1601 GMT). Brent crude futures were up $1.07, or 1.4%, to $79.72 a barrel.
More than half of Libya’s oil production was offline on Thursday and exports were halted at several ports amid a standoff between rival political factions. About 700,000 barrels per day of oil output is offline in the country, according to Reuters calculations.
“Libyan exports were holding up so far, but with the closure of the export terminal, that should translate in a tighter Atlantic basin,” said Giovanni Staunovo, an analyst at UBS.
Meanwhile, Iraq plans to reduce oil output in September as part of a plan to compensate for producing over the quota agreed with the Organization of Petroleum Exporting Countries and its allies, a source with direct knowledge of the matter told Reuters on Thursday.
Iraq, which produced 4.25 million bpd in July, will cut output to between 3.85 million and 3.9 million bpd next month, the source said. Its agreed quota is 4 million bpd.
The possibility of a strong output cut and Iraq’s cancellation of an export cargo were likely helping lift oil prices, Staunovo said, cautioning that most market participants will wait to see an actual drop in exports.
Expectations for the US central bank to start cutting interest rates next month also supported oil prices. Atlanta Federal Reserve President Raphael Bostic said it may be time for cuts, with inflation down farther and unemployment up more than anticipated.
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