Oil prices surged by more than 2% during the day on Thursday amid news that Iraq will reduce its oil production in September, supply disruptions in Libya and strong U.S. economic data.

Brent crude oil prices once approached $80 after falling more than 3% in the past two trading days, while WTI crude oil prices once climbed to more than $76 a barrel.

Oil prices surged further as loading and unloading operations at five Libyan export terminals were ordered to halt. That comes as the country’s output has more than halved this week, threatening to remove nearly 1 million barrels per day of supply from global markets.

"The ongoing outage in Libya will all but wipe out the projected fourth-quarter inventory build and trigger an inventory draw that will take stocks to dangerously low levels," said Scott Shelton, energy expert at TP ICAP Group Inc.

More than half of Libya’s oil output, or about 700,000 barrels per day (bpd), was offline on Thursday, out of a July output of about 1.18 million bpd. Consulting firm Rapidan Energy Group estimates that production losses could reach 900,000 to 1 million bpd and last for weeks.

The dispute over control of Libya's central bank threatens new instability in a country that is a major oil producer and is split between east and west factions backed by Turkey and Russia.

Production at fields controlled by Libya's Wahah Oil Company has fallen to 150,000 barrels per day (bpd) from 280,000 bpd and is expected to fall further, engineers said on Thursday. Production at the Sharara, Sarir, Abu Attifel, Amal and Nafoora fields has also been halted or reduced, engineers said.

Libyan supply issues will keep oil markets nervous and likely limit price declines amid growing geopolitical concerns, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Separately, Iraq plans to cut oil production to 3.85 million to 3.9 million barrels per day in September, according to sources, and has canceled 1 million barrels of spot cargoes for August to reduce exports.

Earlier data showed the U.S. economy grew slightly faster in the second quarter than initially reported, partly reflecting an upward revision to consumer spending. Data on Thursday showed GDP grew at an annualized rate of 3% in the April-June period, above expectations for a 2.8% increase. Personal spending, the economy's main growth engine, rose 2.9%, compared with expectations for a 2.3% increase.

Goldman Sachs Group Inc and Morgan Stanley have cut their 2025 oil price forecasts in recent days and expect a supply glut in the market next year as Asia's economic recovery loses momentum.

Despite this, crude oil has risen slightly this year, however, the possibility of OPEC+ raising production from October still hangs over the market. According to a survey by foreign media, traders are divided on whether the planned production increase will go ahead.

“A prolonged supply disruption from Libya would make OPEC+ feel more comfortable with increasing supply in 4Q24 as currently planned,” ING analysts said in a client note.

Article forwarded from: Jinshi Data