Oil rises as tight supply reappears


Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford

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LONDON, Aug. 23 (Reuters) – Oil rose $1 a barrel on Tuesday as tight supply returned to the spotlight on the idea of ​​OPEC+ output cuts to support prices and the prospect of a decline in U.S. inventories crude oil.

The Saudi energy minister said OPEC+ had the resources to meet challenges, including cutting production, state news agency SPA said Monday, citing comments Abdulaziz bin Salman made in an interview to Bloomberg. read more

The global benchmark Brent oil gained 77 cents, or 0.8%, to $97.25 a barrel at 0814 GMT. US West Texas Intermediate crude rose 94 cents, or 1.0%, to $91.30.

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“Whether it is right to cut OPEC or OPEC+ production after September is debatable,” said Tamas Varga of oil broker PVM. “Despite recent inflation-induced weakness, the oil market seemed to have bottomed recently.”

Oil has surged in 2022, coming close to a record high of $147 in March, after Russia’s invasion of Ukraine exacerbated supply concerns. Concerns about a global recession, rising inflation and weaker demand weighed on prices ever since.

Attention is also paid to the prospect of a nuclear deal between Iran and world powers that would enable Iran to boost oil exports. A senior US official told Reuters on Monday that Iran had dropped some of its key demands to revive a deal. read more

While the price of Brent futures has fallen sharply from this year’s high, the market structure and price differentials in the physical oil market still point to a supply shortage.

In comments reported Monday, the Saudi minister said the paper and physical oil markets had become “disconnected”.

The latest weekly US inventories reports underscore the tight supply and are expected to see a drop of 1.5 million barrels of crude oil. The first of this week’s two reports will be released at 2030 GMT from the American Petroleum Institute.

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Reporting by Stephanie Kelly and Muyu Xu; Editing by Simon Cameron-Moore and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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