Contracts for both crudes soared on Tuesday and hit three-week highs on Wednesday after the Saudi energy minister, Prince Abdulaziz bin Salman signaled the possibility of cutting production.
Sources at the Organization of the Petroleum Exporting Countries (OPEC) later told Reuters that any cuts by the group of producers and their allies, collectively known as OPEC+, it is likely to coincide with a return of Iranian oil to the market if Tehran secures a nuclear deal with world powers.
A US official said on Monday that Iran had abandoned some of its main demands in negotiations to resurrect a deal to curb Tehran’s nuclear program. OPEC+ is already producing 2.9 million barrels a day less than its target, according to the sources, complicating any decision about cuts or how to calculate the baseline for a reduction in output.
“Oil price and supply prospects suggest an OPEC+ cut is not currently warranted”said PVM analyst Stephen Brennock.
Commodity broker Marex also pointed to strong demand due to restocking ahead of winter and the industry’s shift from gas to oil on rising gas prices.
US crude stockpiles fell by some 5.6 million barrels in the week ending Aug. 19, market sources said, citing figures from the American Petroleum Institute. Analysts had estimated a drop of 900,000 barrels in a Reuters poll. Official figures from the US government will be published on Wednesday.
Source: Ambito
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