Oil Prices Rally

Oil prices rallied on Monday due to Libya’s output cuts and escalating tensions in the Middle East related to Israel and Hezbollah, with dwindling hopes for a Gaza ceasefire.

At 14:18 ET (18:18 GMT), Brent crude futures for October rose 2.9% to $80.42 a barrel, while West Texas Intermediate (WTI) crude increased by 3.5% to $77.50 a barrel.

Libya Output Cuts Offer Support

Reports indicate that Libya’s eastern government announced it is halting crude exports and production due to a dispute with the western government. This disruption takes place amidst ongoing concerns about a potential supply glut with OPEC expected to gradually unwind production cuts later this year.

Gaza Ceasefire Remains Elusive; Fears of Wider Conflict

Media reports suggest that weekend negotiations between Hamas and Israel in Cairo failed to yield a ceasefire agreement, dampening hopes for de-escalation in the ongoing 10-month conflict. Despite U.S. officials declaring the talks constructive, the lack of agreement contradicts earlier optimistic statements.

As tensions rose following exchanges of strikes between Hezbollah and Israel, traders began to factor in risks, fearing that the Israel-Hamas conflict could destabilize oil production in this resource-rich region.

*(Ambar Warrick contributed to this story.)