Unsteady political situations, as well as an expected drop in oil production in Libya, have sent the oil prices surging on Monday.
West Texas Intermediate (WTI) Crude jumped as high as 3.7% before later settling at 3.46% and trading at $77.42 per barrel.
Brent Crude, used as an international benchmark price, has gone up by 3.05% and was trading at $81.43 per barrel at one point.
Tensions in Libya are currently on a high level, with several factions trying to take over the control of the country’s oil output. Experts believe that this could result in drastic cuts in production and exports. The country is currently the biggest oil producer in Africa and the 16th largest producer in the world.
“The biggest risk for the oil market is probably a further drop in Libyan oil production due to political tensions in the country, with a risk that production could fall from current levels of 1 million barrels per day to zero,” Giovanni Staunovo, an analyst with the Swiss bank UBS, told Reuters.
If Libya goes ahead with plans to lower its output, the United States is expected to be the biggest beneficiary. European countries are expected to turn to U.S. shale oil reserves in order to make up for the lack of oil from Libya.