Oil Prices Increase 4% Amid Libya Strife, OPEC+ Members’ Push for Production Cuts

NEW YORK (Sputnik) - Crude prices jumped 4% Monday for their biggest percentage gain in a day since mid-July as civil strife in Libya threatened oil production from a nation that counts as seventh most important in the Organization of the Petroleum Exporting Countries (OPEC).

The 13-member Saudi-led OPEC and its ten allies steered by Russia - collectively known as OPEC Plus - could also push for production cuts when the alliance holds its monthly meeting on September 5, industry analysts said.

New York-traded West Texas Intermediate (WTI) crude, the benchmark for US oil, settled Monday’s trade up $3.95, or 4.2%, at $97.01 per barrel. WTI rose 2.5% for all of last week, after the previous week’s decline of 1.4%.

Brent crude, the London-traded global benchmark for oil, finished the session up  $4.10, or 4.1%. Last week, Brent jumped 4.4%, versus the previous week’s slide of 1.5%.

Heavy clashes in Libya's capital resulting in 32 deaths over the weekend have sparked concerns that the country could slide into a full-blown conflict, which could again disrupt crude supply from one of OPEC’s larger producers.

Almost nearly every country in the 23-nation strong OPEC Plus, save for Saudi Arabia and the United Arab Emirates, are producing below quota at present.

Yet, some within the alliance are pushing for production cuts to recapture the price highs from earlier this year, when Brent traded as high as $140 a barrel and US crude stood at almost $130 in the aftermath of the Ukraine conflict.

The grand plan among OPEC Plus’ less significant members is that cuts can be announced at next week’s meeting and that the Saudis and Emirates carry those reductions - as has been the norm in the alliance for most of the past two years.

“It’s the same story each time,” John Kilduff, partner at New York energy hedge fund Again Capital, said. “Crude prices drop $20 or more a barrel and these OPEC+ guys will be yelling cut, cut, when they’re producing well below quota. They’ll make whatever noise they can between now and the next week to try and get the market up as much as possible.”

The push for OPEC Plus production cuts and the conflict in Libya aside, crude prices were also helped by costlier natural gas in Europe that was spurring power generators and industrial users to switch to diesel and fuel oil.