Oil Prices Rise Due to Supply Disruptions

Oil prices increased on Tuesday, bolstered by supply disruptions in Libya, where a split between rival factions over control of the central bank has led to a decline in oil production and exports, according to analysts from Rystad.

Prices were also supported by growing supply interruptions and bets that demand will rise if the Federal Reserve cuts borrowing costs this week, as anticipated.

U.S. crude futures gained $1.10, or 1.57%, to $71.19 per barrel, while Brent futures rose 95 cents, or 1.31%, to $73.70 per barrel.

More than 12% of Gulf of Mexico crude production was offline following Hurricane Francine last week, driving up oil prices in three of the last four sessions. This rebound follows Brent reaching its lowest level in nearly three years the previous Tuesday. Oil prices have been recovering since Wednesday, partly due to supply concerns after Hurricane Francine and expectations of reduced U.S. crude inventories.

U.S. crude stocks likely fell by about 500,000 barrels in the week ending September 13, according to a Reuters survey of analyst estimates.

The disruption in Libyan oil supplies, stemming from a division between rival factions over central bank control, has contributed to the rise in prices. United Nations-led talks to resolve the crisis did not achieve an agreement this week.

Investors are also anticipating that a rate cut by the Fed could stimulate demand in the United States, the world’s largest oil consumer.