Oil jumped more than 3% on Wednesday following a disruption at a major Libyan oil field due to protests and a statement from OPEC promising unity among the oil alliance's members.
West Texas Intermediate (CL=F) settled at $72.70 per barrel while Brent (BZ=F) crude closed at $78.25 per barrel.
The shutdown of El Sharara, a site which produces 300,000 barrels per day, comes amid heightened concerns of geopolitical tensions in the Middle East impacting supplies.
Last month shipping giants temporarily paused Red Sea shipments amid attacks by Houthi rebels spurred by the Hamas-Israel war.
On Wednesday, the Yemeni militant group backed by Iran said it targeted a container ship headed towards Israel. The move comes after US Navy helicopters destroyed three Houthi boats on Sunday in response to a container ship hijack attempt on the Red Sea.
The threat of a broader conflict disrupting Iran's production has sent prices higher, at least temporarily. On Tuesday futures jumped more than 2% before giving up gains after Tehran deployed a warship to the Red Sea.
"The real threat to prices is the Iranian oil exports (near 2 million barrels per day) that could suddenly be taken off the global market," Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.
Crude futures lost more than 10% during a volatile 2023. The yearly decline in prices came despite aggressive production cuts by oil alliance OPEC+. Deeper output declines announced last year were met by market skepticism, initially sending prices lower.
Analysts forecast that increased production coming from the US will help make up for the oil alliance's output reductions in 2024.
"Near term US production has taken most of the slack that OPEC has cut," said Kissler.
On Wednesday OPEC said its members "re-affirm their steadfast commitment to the shared objectives of unity and cohesion" within the organization.
Last month Angola, a 16-year member of OPEC said it was leaving the cartel over quota disagreements.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.