U.S. crude oil futures rose nearly 2% on Thursday, rebounding after a two-day losing streak as Libya confirmed major disruptions in its oil output.

Production in Libya has fallen by 1.5 million barrels over the past three days for a total loss of $120 million, according to the OPEC member’s National Oil Corporation.

The consulting firm Rapidan Energy has estimated production disruptions in Libya would total 900,000 to 1 million bpd and last several weeks.

Meanwhile, Iraq plans to reduce oil output from 4.25 million bpd in July to about 3.9 million bpd in September, a source told Reuters. Iraq has been producing more than its quota of 4 million bpd under an agreement with OPEC and its allies, according to Reuters.

Here are Thursday’s energy prices:

  • West Texas Intermediate October contract: $75.91 per barrel, up $1.39, or 1.87%. Year to date, U.S. crude oil has gained 5.9%.
  • Brent October contract: $79.94 per barrel, up $1.29, or 1.64%. Year to date, the global benchmark is ahead 3.7%.
  • RBOB Gasoline September contract: $2.24 per gallon, up 3 cents, or 1.49%. Year to date, gasoline has advanced 6.9%.
  • Natural Gas September contract: $2.13 per thousand cubic feet, up 4 cents, or 1.9%. Year to date, gas has fallen 15%.

“The meltdown in Libyan crude oil production, the increasing threat of a wider war in the Middle East, and EIA crude oil storage at an eight month low, are all serving as tailwinds for crude oil,” Bob Yawger, executive director of energy futures at Mizuho Securities, wrote in an afternoon note.  

“However, crude oil bulls should proceed with caution,” Yawger wrote. “The longer the rally in crude oil, and the higher the price, the more likely OPEC+ will be to add the 500,000 plus back to the market starting in October.”

Rival governments in Libya are locked in a political dispute. The eastern government in Benghazi, which is not internationally recognized, has threatened to shut down all oil production and exports as the U.N.-backed western government in Tripoli seeks to replace the OPEC member’s central bank head.

Libya produces about 1.2 million bpd, with most of its crude exported to the global market. Matt Smith, lead oil analyst for the Americas at Kpler, said the U.S. benchmark would likely benefit the most from the disruptions, as it is the best replacement for European buyers who need to substitute lost Libyan supply.

U.S. crude jumped more than 3% on Monday on disruptions in Libya, but subsequently pulled back as the extent the outages were unclear and slowing demand in China weighed on the market.

The U.S. benchmark has been trading in a range this month between $71 and $80 per barrel. Prices have risen on the risk of supply disruptions in the Middle East as tensions escalate between Israel, Iran and the Islamic Republic’s ally Hezbollah.

But gains on geopolitical risk have quickly faded as demand falters in China due to surging electric vehicles sales and a tepid economy.

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