April 9 (UPI) -- Strong compliance with an OPEC-led effort to balance the market and heightened geopolitical risk pushed crude oil prices higher in early Monday trading.
Crude oil prices have followed the equities market in recent days on concerns of a trade war erupting between the United States and China, the world's leading economies. Oil prices dropped sharply last week on the risk because of the possibility of billions of dollars of trade on the line. That was compounded by an increase in exploration and production in the United States, which is on pace to be the world leader in crude oil production.
U.S. output is balanced by an effort from the Organization of Petroleum Exporting Countries to erase a surplus on the five-year average in global oil inventories through coordinated production cuts. A market report emailed by commodity pricing group S&P Global Platts found OPEC production in March was 32.1 million barrels per day, its lowest level in 11 months.
"The March output figure is 590,000 barrels per day below OPEC's notional ceiling of about 32.73 million barrels per day, when every country's quota under its production cut agreement is added up," the report read.
After heavy losses on Friday, crude oil prices were back in positive territory Monday morning. The price for Brent crude oil was up 1.4 percent as of 9:15 a.m. EST to $68.05 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.26 percent to $62.84 per barrel.
A slump in crude oil production in Venezuela supported OPEC's production figures in March and only three members -- Ecuador, Iraq and the United Arab Emirates -- reported an increase in output. Nigeria and Libya are exempt because of national security issues. For an added risk factor for OPEC, the conflict in Yemen has pitted two of its largest producers, Iran and Saudi Arabia, against each other.
Iran, meanwhile, struck a defiant tone on Monday, saying Western allies may have regrets should U.S. President Donald Trump break the U.N.-backed nuclear agreement when sanctions go under review in May.
French financial services firm Societe Generale said the risk premium on crude oil was largely centered on Iran. In an emailed market report, Soc Gen said there are other geopolitical tensions building in the market, but the risk to sanctions that let Iranian oil flow through the market was an obvious factor for the price of oil.
"We place a 70 percent probability of Iran oil sanctions snapping back into effect on May 12, with a $10 price impact, of which $5 per barrel is already priced in," the report read.