Brent oil rises above $100 a barrel amid OPEC cut talks

An aerial view shows tugboats berthing a crude oil tanker at an oil terminal near Waidiao Island in Zhushan, Zhejiang Province, China on July 18, 2022. cnsphoto REUTERS

LONDON, Aug 24 (Reuters) – Benchmark Brent oil rose above $100 a barrel on Wednesday after Saudi Arabia suggested this week that OPEC might consider cutting output in response to poor liquidity in the crude futures market and fears of a global economic slowdown.

Brent for October settlement hit a three-week high, up $1.30, or 1.3%, to trade at $101.52 a barrel by 0850 GMT. U.S. crude was up $1.18, or 1.3%, at $94.92 a barrel.

Both crude contracts rose on Tuesday after Energy Minister Prince Abdulaziz bin Salman flagged the possibility of production cuts amid weak futures market liquidity and macroeconomic concerns. Read more

OPEC sources later told Reuters that any cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, could be matched by Iran’s return to the market if Tehran strikes a nuclear deal with the world power. Read more

A US official said on Monday that Iran had dropped some of its main demands on reviving a deal. Read more

OPEC+ is already producing 2.9 million barrels per day less than its target, sources said, complicating how to calculate a baseline for any decision on cuts or output cuts. Read more

“The outlook for oil prices and supply suggests that OPEC+ cuts are not certain at present,” said PVM analyst Stephen Brennock, outlining potential threats to supply based on the market.

“As the US’s peak hurricane season approaches, global oil supplies could be impacted,” he said. “Elsewhere, future supply disruptions in Libya cannot be discounted while Nigeria’s oil fortunes show little sign of improvement.”

U.S. crude stockpiles fell by about 5.6 million barrels in the week ended Aug. 19, market sources said, citing figures from the American Petroleum Institute. Analysts polled by Reuters had estimated a decline of 900,000 barrels.

US government figures will be released on Wednesday.

Market participants will watch Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Central Bank Symposium on Friday. He is expected to emphasize the Fed’s focus on controlling inflation.

Additional reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo

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