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Oil prices are spiking to mid-2015 highs after a Libyan pipeline blast

Oil prices surged to more than 2½-year highs Tuesday on reports that a pipeline explosion in Libya has disrupted a big chunk of the country’s crude supply.

International benchmark Brent crude rose $1.50, or 2.3 percent, to $66.75, after hitting an intraday peak of $66.89, its highest level since May 2015.

Meanwhile, U.S. West Texas Intermediate crude futures jumped $1.32, or 2.3 percent, to $59.79, having traded as high as $59.91, the best level since June 2015.

U.S. WTI crude intraday, source: FactSet

The oil price spike occurred during thin trading between the Christmas and New Year’s holidays.

An explosion hit a pipeline that feeds Libya’s Es Sider terminal, causing the country to lose about 90,000 barrels a day of production, sources told Reuters. Libya produced 973,000 barrels a day in November, according to independent sources cited by OPEC.

Supply to Es Sider has been disrupted in the past due to an ongoing conflict between rival factions in Libya. A military source told Reuters that armed men had rigged the pipeline with explosives.

Libya is one of two OPEC members, along with Nigeria, that were exempt from a deal to cap production this year. Both countries have suffered oil supply outages related to internal conflicts.

The 14-member cartel, Russia and nine other exporting nations recently extended an agreement to keep 1.8 million barrels a day off the market to help shrink brimming stockpiles of crude around the world.

That deal has helped to balance a glutted market, so supply disruptions are more likely to push up crude prices.

Prices have been supported in recent weeks by another pipeline outage that carries U.K. North Sea Forties crude to market. The price impact has worn off in recent days as operator Ineos has signaled the pipeline will soon start moving oil again.

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