June 18 (UPI) -- Middle East tensions, heightened by militant activity in OPEC-member Libya, and guesses over what's next for the producer group sent oil prices higher Monday.
The price for Brent crude oil dropped nearly 4 percent on Friday after the Chinese response to U.S. trade decisions. The downturn came amid warnings from the International Monetary Fund that there are no winners in a global trade war.
The decline came amid warnings that higher oil prices could be limiting growth in the world's leading economies. Higher oil prices, meanwhile, could be eating away at consumer tax benefits in the United States, the world's leading economies. U.S. President Donald Trump has accused OPEC of keeping oil prices higher, and ministers from the production group meet at the end of the week to consider their collective effort to stabilize the market.
Sources referenced by Bloomberg News on Monday said OPEC is considering a production increase of between 300,000 and 600,000 barrels per day to help buffer a market shorted by limitations from founding-member Venezuela and the potential loss of Iranian barrels. That's far less than the 1.5 million barrels per day floated by Russia, the largest non-member contributor to OPEC's effort.
The price for Brent crude oil, the global benchmark, was up 1.18 percent as of 9:23 a.m. EDT to $74.31 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.31 percent to $65.05 per barrel.
WTI is trading at a steep discount to Brent in part because exports are limited by the lack of infrastructure needed to accommodate gains in U.S. oil production. China, meanwhile, responded to U.S. trade actions by targeting U.S. crude.
OPEC, meanwhile, needs to consider opposition to production increases from Iran, Iraq and Venezuela. In Libya, the National Oil Corp. said it was concerned that fires at an oil storage depot could spread. Production has been limited by militant activity that erupted last week, holding back about a quarter of the roughly 1 million barrels per day coming from Libya.
"Tension in Libya has been bubbling away under the surface for the last few months," Matthew Smith, the director of commodity research at ClipperData, told UPI. "Violence in recent days and an impact on oil flows has put it back on the geopolitical risk radar once again."
Libya is exempt from the OPEC agreement because of security concerns. During the weekend, tensions flared up elsewhere in the region as Saudi Arabia said it tracked a missile headed to its territory from Yemen.
Conflict in Yemen has become something of a proxy war between Saudi Arabia and Iran.