U.S. crude oil jumps more than 3% on Libya production halt for best day in two weeks

U.S. crude oil futures gained 3% on Monday for the best day in two weeks, amid reports of a production halt in Libya and after Israel and Hezbollah traded a barrage of strikes across the Lebanon border.

Libya’s eastern government in Benghazi said Monday that oil production and exports in the North African country would shut down, amid a dispute with the internationally recognized western government in Tripoli over who should lead the central bank.

The U.S. benchmark hit a session high of $77.60 per barrel, the highest level since Aug. 16.

Here are Monday’s closing energy prices:

• West Texas Intermediate October contract: $77.42 per barrel, up $2.59, or 3.46%. Year to date, U.S. crude oil has gained 8.05%.
• Brent October contract: $81.43 per barrel, up $2.41, or 3.05%. Year to date, the global benchmark has advanced 5.7%.
• RBOB Gasoline September contract: $2.28 per gallon, little changed. Year to date, gasoline is ahead 8.4%.
• Natural Gas September contract: $1.95 per thousand cubic feet, down more than 6 cents, or 3.26%. Year to date, gas is down 22.2%

Libya produces about 1.2 million barrels per day, with more than 1 million bpd exported to the global market, said Matt Smith, lead oil analyst for the Americas at Kpler.

“The force majeure on Libyan production and exports has the potential to have a significant impact on global markets,” Smith told CNBC.

U.S. crude will likely be the biggest beneficiary from the shutdown, with Europe buying U.S. shale oil to replace lost Libyan supply, Smith said.

Israel launched a major wave of airstrikes in Lebanon on Sunday, describing the operation as a preemptive strike to prevent Hezbollah from firing a barrage of missiles. Hezbollah said it had launched hundreds of missiles at Israel in retaliation for the killing of one of the militia’s senior commanders in July.

The Middle East has been on edge for weeks after the assassinations of the Hezbollah commander in Beirut and a Hamas leader in Tehran, Iran.

Iran has also vowed to retaliate against Israel, but so far the threatened attack has not materialized.