ALBAWABA – Oil prices soared on Tuesday after Saudi Energy Minister Prince Abdulaziz bin Salman said late Monday that the Organization of Petroleum Exporting Countries and its allies (OPEC+) are working towards a stable oil market.
Global benchmark Brent futures rose $0.58 to $95.01 per barrel, while United States (US) West Texas Intermediate (WTI) crude futures soared by $0.99 to $92.47, by 4 a.m. GMT, according to Reuters.
OPEC is working to keep oil markets stable and improve global energy security, without targeting any specific price level for crude, bin Salman said at the World Petroleum Congress in Calgary on Monday.
Concerns regarding the US hiking interest rates this week have also bolstered oil prices - Shutterstock
“Proactive, preemptive and precaution — these three words will address how we are attending to the situation knowing there are uncertainties coming from multiple directions,” he reaffirmed.
As for demand in China — one of the key drivers of global crude prices — “the jury is still out,” the minister said, according to Bloomberg.
Oil surged to a 10-month high — extending a powerful rally that may rekindle inflation — as supply cuts from OPEC+ tightened the market. Meanwhile, Saudi Arabia does not seem to be willing to change course.
Tightening supplies are bolstering oil prices
Saudi Arabia has led a charge since April to reduce output from OPEC and its allies (OPEC+) to revive flagging supplies, starting with a unilateral 500,000-barrel-a-day production cut that took effect in May.
The Saudis then followed with a 1-million-barrel-a-day reduction that has been extended through the end of the year.
A stronger dollar weighs on oil prices - Shutterstock
In the meantime, US oil output from top shale-producing regions will likely fall to 9.393 million barrels per day in October, the lowest level since May 2023, the Energy Information Administration (EIA) said on Monday. It will have fallen for three months in a row, Reuters reported.
Prince Abdulaziz said later, on the sidelines of the conference, that output plans will be reviewed on a monthly basis and that they’ll wait until they see “real numbers” that show the market’s tightness before making further decisions.
Still, there are signs that the rally in oil prices could be due to overbuying in the short term and may be done soon, with crude’s 14-day relative strength index hitting the highest level since March last year. It’s been above 70 — a level indicating futures may be overbought — for most of the prior two weeks.
