U.S. crude oil futures fell more than 2% to close below $76 per barrel on Tuesday, after surging in the previous session on reports OPEC member Libya will halt production and exports.

Libya produces about 1.2 million barrels per day with the overwhelming majority of its crude exported to the global market, and European nations serving as the main buyers. U.S. oil surged because it is the best substitute for importers looking to replace lost Libyan supply.

But the U.S. benchmark is pulling back slightly as the market expects a gradual disruption rather than all of Libya’s production suddenly going offline, Sara Vakhshouri, founder of SVB Energy International, told CNBC’s “Capital Connection” on Tuesday.

Here are Tuesday’s closing energy prices:

  • West Texas Intermediate October contract: $75.53 per barrel, down $1.89, or 2.44%. Year to date, U.S. crude oil has gained 5.4%.
  • Brent October contract: $79.55 per barrel, down $1.88, or 2.31%. Year to date, the global benchmark is ahead 3.3%.
  • RBOB Gasoline September contract: $2.24 per gallon, down 3 cents, or 1.45%. Year to date, gasoline is ahead 6.8%.
  • Natural Gas September contract: $1.90 per thousand cubic feet, down more than 5 cents, or 2.66%. Year to date, gas is down 24.3%.

Goldman Sachs sees the disruptions in Libya as short-lived with 600,000 bpd falling off the market in September and 200,000 bpd in October.

Libya is divided between rival governments in Tripoli and Benghazi. The Benghazi government announced the production halt Monday amid a dispute with the Tripoli government over who should lead the central bank.

U.S. policy has been designed to keep foreign oil on the market, says RBC's Helima Croft

“In the case of Libya, the eastern regional government can turn off Libyan production like a light switch,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said on CNBC’s “Squawk Box” on Tuesday.

“[General Khalifa Haftar], he’s a militia leader in the east. If he wants to shut it down, he controls all the terminals in the east, the infrastructure — so they can shut it down,” Croft said.

Goldman slashed its forecast for Brent prices by $5 to a range of $70 to $85 per barrel and expects the global benchmark to average $77 in 2025, down from $82 previously.

Demand in China has softened as the world’s second-largest economy switches from gasoline-powered cars to electric vehicles, Daan Struyven, head of oil research at Goldman, told clients in a Monday note. And supply out of the U.S. is beating expectations on efficiency gains, Struyven said.

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