Oil Prices Increase Amid Supply Risks

Oil prices settled higher Thursday due to ongoing supply risks as crude output in Libya declined, while Iraq announced plans to cut output starting next month.

At 2:30 p.m. ET (1830 GMT), Brent oil futures rose 1.7% to $77.86 a barrel, and West Texas Intermediate crude futures climbed 1.9% to $75.95 a barrel.

Supply Risks Persist as Libya Output Drops, Iraq Plans to Cut Supplies

Libya halted more than half of its production on Thursday, taking about 700,000 barrels a day offline, according to Reuters. The Central Bank of Libya, responsible for oil export payments, is controlled by the internationally recognized government in the west.

The eastern region, which holds most oilfields and is governed by a separate leadership, has called for a change in the central bank’s leadership and shut down all oil production.

In July, Libya produced approximately 1.2 million barrels per day, and extended shutdowns could lead to a global oil supply shortfall.

Additionally, Iraq plans to reduce oil output in September to comply with the OPEC output-cut agreement after exceeding its production quota.

US Economic Data Due

According to a Commerce Department report, GDP grew by 3% in the last quarter, exceeding expectations of 2.8% and improving from 1.4% in the first quarter. This growth mitigates fears of a significant economic slowdown.

As the top oil consumer, a stronger US economy suggests crude demand may remain steady. This positive data follows a report indicating a smaller-than-expected draw in weekly crude supplies as summer ends.

US Inventories Fall by Less Than Expected

U.S. oil inventories experienced a smaller-than-expected draw of 0.85 million barrels for the week ending August 23, according to the Energy Information Administration.

Gasoline inventories also had a larger-than-expected draw, while distillates recorded an unexpected increase. The mixed inventory data heightened concerns about cooling U.S. oil demand as summer travel wanes, alongside worries about a slowing economy impacting demand due to recent weak labor market indicators.

*(Peter Nurse, Ambar Warrick contributed to this article.)