Oil prices yesterday surged to a five-week high after Saudi Arabia and Russia signaled their support for an extension of OPEC+ output cuts and a US-China agreement to restart trade talks improved the demand outlook.
Futures rose as much as 2.8 percent after rallying more than 11 percent over the past two weeks. Other OPEC members have indicated their support for the agreement between Russian President Vladimir Putin and Saudi Crown Prince Mohammad bin Salman to prolong the curbs by six to nine months before their meeting in Vienna this week.
Meanwhile, Washington and Beijing declared a second truce to their trade war and the US would hold off on imposing additional tariffs on China.
Photo: AFP
“The market is more relieved than happy,” said Vandana Hari, founder of Vanda Insights in Singapore.
The trade deal was basically just a ceasefire and an extension of the OPEC+ cuts was a “foregone conclusion,” she said.
West Texas Intermediate oil for August delivery climbed US$1.50 to US$59.97 a barrel on the New York Mercantile Exchange as of 7:42am in London after advancing to as high as US$60.13 earlier, while Brent for September settlement rose US$1.71, or 2.6 percent, to US$66.45 a barrel on the ICE Futures Europe Exchange.
OPEC+ oil ministers were to hold a series of meetings yesterday and today to discuss production policy. Saudi Arabia and Russia are the largest members in the group and are usually able to steer the alliance toward their preferred strategy.
“The longer the horizon, the stronger the certainty to the market,” OPEC Secretary-General Mohammad Barkindo said on Sunday in the Austrian capital after meeting with Saudi Arabian Minister of Energy and Industry Khalid al-Falih.
Members of the OPEC should have unity among themselves, Iranian Minister of Petroleum Bijan Zanganeh was quoted as saying yesterday, adding that Tehran backed cooperation with non-OPEC oil exporter states.
“Without unity among members of OPEC, it is meaningless to plan cooperation between OPEC and non-OPEC countries,” the Iranian Ministry of Petroleum Web site SHANA quoted Zanganeh as saying before leaving Tehran to attend an OPEC meeting in Vienna.
“While we have not been hostile to any country, some members of the OPEC have taken the path of hostility with our nation,” SHANA reported Zaganeh saying.
Iran has objected to policies put forward by its regional arch-rival Saudi Arabia, saying Riyadh was too close to the US.
“Iran supports cooperation with non-OPEC states, but as long as some members of OPEC are hostile against other members, like Iran, OPEC’s understandings with non-OPEC states are meaningless and there is no room for cooperation,” Zanganeh said.
Recent unexplained attacks on oil and fuel tankers in the waters near the Straits of Hormuz and Iran’s shooting down of a US drone are recent signs of the escalation of the dispute between the US and Iran over its nuclear program.
Prior to reimposition of the US sanctions, Iran was OPEC’s third-largest oil producer.
Additional reporting by Reuters
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