ALBAWABA – Oil prices edged up on Monday as the US Dollar slipped and supply concerns mounted over the Biden Administration slamming Iranian oil with tighter sanctions in light of the Islamic Republic’s alleged involvement in the surprise Gaza attack, on October 7.
Top exporters Saudi Arabia and Russia also announced they would stick to the extra voluntary oil output and supply cuts announced earlier this year, bolstering oil prices.
Brent crude futures rose $0.55, or 0.65 percent, to $85.44 a barrel by 0700 GMT, according to Reuters, and West Texas Intermediate (WTI) crude traded at $81.14 a barrel, up $0.63, or 0.78 percent.
Saudi Arabia confirmed upholding the additional voluntary cut of 1 million barrels per day (bpd) in December to keep output at around 9 million bpd, an unnamed source at the ministry of energy said in a statement, as reported by Reuters.
Likewise, Russia as well announced upholding the additional voluntary supply cut of 300,000 bpd from its crude oil and petroleum product exports until the end of December.
A stronger US dollar weakens demand, which lowers oil prices - Shutterstock
More so, over the weekend, the US House of Representatives passed a bill to bolster sanctions on Iranian oil that would impose measures on foreign ports and refineries that process Iranian oil. Namely ports of countries that are signatories to the law.
Meanwhile, the dollar index slipped 0.08 percent to 104.99, with the euro gaining 0.08% to $1.0738, Reuters reported. The dollar index declined more than 1% last week, marking its heaviest fall since mid-July, down to a six-week low.
Of course, a weaker US dollar means higher oil prices, and vice versa, because a stronger dollar makes oil more expensive for countries settling in other currencies, which weighs on demand.
Contrarily, a weaker US dollar boosts demand, which bolsters oil prices.
Bloomberg’s US dollar index shows the greenback slipping 0.13 percent to 104.8870, as of 12:15 p.m. Amman time.
Additionally, softer manufacturing numbers from around the world and the decline in longer-dated Treasury yields also hurt the dollar, according to Reuters. Especially against the rallying sterling and Aussie dollar, causing the yen to bounce from the weaker side of 150 per dollar.
