(CNN) — Venezuela is in chaos. Iran is grappling with US sanctions. And now there’s a surge of violence in Libya. Trouble in these three OPEC nations has helped send US oil prices climbing back above $64 a barrel.

The latest OPEC turmoil amplifies the supply constraints imposed by the cartel’s kingpin. Saudi Arabia has slashed production as well as exports to the United States in a bid to engineer higher prices and balance its budget.

Despite record-shattering US oil production, US oil prices have spiked 50% since plummeting to $42.53 a barrel on Christmas Eve. And gasoline prices are creeping higher just as the American economy grapples with a slowdown.

“The oil supply story is bullish,” said Shin Kim, head of supply and production at S&P Global Platts. “The potential for an escalation of the conflict in Libya has renewed significant risks to oil production.”

US oil prices hit a five-month high of $64.79 a barrel on Tuesday morning before retreating.

“I wouldn’t be surprised to see oil prices hit $70 before mid-summer,” said Ryan Fitzmaurice, energy strategist at Rabobank.

Brent crude, the global benchmark, is already above $71 a barrel for the first time since mid-November.

‘Grave security crisis’

Clashes in Libya in recent days raise the risk that the war-torn country’s 1.3 million barrels of daily oil production will be imperiled. Libya’s UN-backed government said it repelled an attack by rebels over the weekend after briefly losing control of Tripoli’s airport.

“OPEC’s perennial ‘problem child’ producer” is facing a “grave security crisis,” Helima Croft, global head of commodity strategy at RBC Capital Markets, wrote in a note to clients.

The United States military pulled a contingent of trips from Libya over the weekend, citing the nation’s “increasingly complex and unpredictable” security situation.

Libya’s oil output was sidelined for years due to a bloody civil war. But production has been on the rise again in recent months.

Actual supply has not yet been impacted, but oil traders are monitoring the situation closely.

“The market gets skittish. If Libya were to go out, oil prices could easily spike $5 to $10 from current levels,” said Ben Cook, portfolio manager at BP Capital Advisors.

Sanctions, blackouts hit Venezuela

While Libya is front-and-center right now, the turmoil in Venezuela has been a bigger driver of actual supply trouble.

Venezuela has been hit by the Trump administration’s sanctions on state oil company PDVSA. The United States imported zero barrels of crude from Venezuela during the final three weeks of March, according to US government statistics. It’s a sharp decline from weekly imports of around 600,000 barrels per day before the sanctions were announced in late January.

The United States has never gone a full month without importing oil from Venezuela since the government began tracking this metric in 1973.

Venezuela’s oil output was further derailed by mass blackouts in the country, which has added to the nation’s humanitarian crisis.

Meanwhile, oil investors are watching for the Trump administration to drop clues on whether it will extend waivers that have allowed countries to keep buying oil from Iran. The waivers were announced last summer and contributed to a supply glut that sent crude prices crashing into a bear market.

“Those waivers were largely politically driven,” Cook said, pointing to last fall’s midterm elections. “We don’t have that this time.”

OPEC and its allies will likely take a victory lap when leaders meet in June in Vienna. The group’s production cuts successfully lifted oil prices in short order.

Saudi Arabia has been especially aggressive. The world’s leading oil exporter has sharply cut shipments to the United States as a way to demonstrate its commitment to balance the market.

What about the US shale oil boom?

Another driver for higher oil prices: bullish bets made by hedge funds and other financial players.

After going bearish on oil last year, these trend-following traders have gone long on crude in recent months. Those speculative positions can exaggerate price swings.

“It’s been pretty dramatic,” said Rabobank’s Fitzmaurice. “As prices have rallied, all of this money has poured back into the market. That’s definitely kept a bid under prices.”

The most stunning part of the oil rebound is that it’s come in the face of blockbuster production from the United States.

America pumped a record 10.96 million barrels per crude a day in 2018, up by 17% from the year before, according to the US Energy Information Administration. That trend accelerated in December when US output hit an all-time monthly high of 11.96 million barrels per day.

The explosive US growth isn’t expected to end either. Lifted by the shale oil boom, the EIA expects US output to average 12.3 million in 2019 and 13 million in 2020.

How will Trump respond?

It’s possible the oil price spike will encourage President Donald Trump to renew his criticism of OPEC. Previous attacks have caused short-term declines in oil prices.

The Trump administration could also release barrels from the Strategic Petroleum Reserve, the nation’s emergency stockpile of oil.

But Fitzmaurice doubts such a move would provide lasting relief.

“I would expect them to wait until peak driving season before using the bullets they have,” he said.

The-CNN-Wire

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