LONDON: Oil rose nearly 1% on Monday as potential OPEC+ production cuts and the conflict in Libya helped offset a strong US dollar and a dire outlook for US growth.
Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), last week raised the possibility of production cuts, which sources said could coincide with an increase in oil supply. Iran if it makes a nuclear deal with the West.
Brent crude rose 65 cents, or 0.6%, to $101.64 a barrel at 0815 GMT, extending last week’s 4.4% gain. U.S. West Texas Intermediate (WTI) crude rose $1.22, or 1.3%, to $94.28 after rising 2.5% last week.
“Oil prices are rising gradually on hopes of a production cut from OPEC and its allies to restore market balance in response to the revival of the Iran nuclear deal,” Sugandha Sachdeva said. , Vice President of Commodity Research at Religare Broking.
OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on September 5.
Oil prices fall after US Fed Chairman warns of economic woes ahead
The price of crude oil has surged this year, with Brent nearing a record high of $147 in March as Russia’s invasion of Ukraine exacerbated supply issues. Growing concerns about high interest rates, inflation and recession risks have since weighed on the market.
Oil’s gain was limited by a strong U.S. dollar, which hit a 20-year high on Monday after the Federal Reserve chairman signaled that interest rates would be kept higher for longer to rein in inflation.
“While a strong dollar limits commodity prices, the undersupply issue in oil markets will likely continue to support the bullish bias,” said CMC Markets analyst Tina Teng.
Unrest in Libya’s capital over the weekend, killing 32, has raised fears the country could slide into full-scale conflict and disrupt the OPEC nation’s oil supply.