Oil Rises as Saudi Arabia Sees OPEC+ Production Cuts
The global crude oil prices inched higher due to the expectation of supply tightening. The oil prices have been affected by global developments including a slowdown in Chinese economy and recession fears in the United States.
Pressures emanating from a stronger United States dollar against major trading partners have also impacted on demand, with seesaw movements in prices ahead of the Organisation of Petroleum Exporting Countries and allies (OPEC+) meeting.
Trading data shows that West Texas Intermediate WTI crude oil closed with a gain on Tuesday after Saudi Arabia warned OPEC+ could cut production to narrow a gap between high prices in the physical oil market and weaker futures prices.
Crude for October delivery closed up US$3.38 to US$93.74 per barrel, Marketwatch reported. October Brent crude, the global benchmark, was last seen up US$3.53 to US$100.01, while Western Canada Select was up US$3.19 to US$73.98 per barrel.
Saudi oil minister Prince Abdulaziz bin Salman told Bloomberg News that OPEC+ could cut production when the group next meets to set quotas to improve producers’ ability to manage risks through hedging and reduce volatility.
However, the potential return of Iranian supply as negotiations to restore the 2015 nuclear accord continue may also factor into his comments. READ: Oil Gains as Saudi Arabia Raised Official Selling Price
“How a lower production volume is supposed to restore the balance between the futures market and the physical market remains unclear, though.
“Possibly Saudi Arabia wants to prepare for a scenario in which the US agrees to a renewal of the nuclear agreement with Iran, thereby allowing the latter to return to the oil market.
“The fact that Saudi Arabia appears to regard an oil price of around $90 as too low could be seen by speculators as an invitation,” Commerzbank said in a note. Oil Rises as Saudi Arabia Sees OPEC+ Production Cuts
