Brent crude extended gains as Saudi Arabia expressed hope that OPEC and its allies will agree to extend production cuts into the second half at a meeting that will probably take place early next month.
Futures rose as much as 0.6% in London after climbing 3.4% in the past two sessions. The OPEC+ coalition will probably meet in “the first week of July and that will secure the rebalancing the market as we strive for it,” Saudi Energy Minister Khalid Al-Falih said Sunday in Japan. Meanwhile, the kingdom’s crown prince joined with the U.S. to blame Iran for the latest attacks on tankers, according to an interview with Asharq Al Awsat newspaper.
Oil rallied off its lows last week as the attacks on two tankers near the Strait of Hormuz raised concern that crude flows may be disrupted from the Middle East. While OPEC+ appears to be getting closer to a deal to extend supply cuts, swelling American stockpiles and a deepening trade war between the U.S. and China continues to dent the outlook for demand.
“With the U.S. administration pointing the finger at Iran for the recent tanker attacks, the risk of further supply disruption remains elevated and should support oil prices,” said Stephen Innes, managing partner at Vanguard Markets Pte in Singapore. Saudi Arabia’s statement on further cuts should assure some investors that a deal may be near, he said.
Brent for August settlement added 19 cents to $62.20 a barrel as of 11:55 a.m. in
Singapore on London’s ICE Futures Europe Exchange. The contract closed 1.1% higher at $62.01 on Friday, paring a fourth weekly decline.
West Texas Intermediate for July delivery rose 12 cents, or 0.2%, to $52.63 a barrel on the New York Mercantile Exchange. The contract closed 23 cents higher to $52.51 on Friday. The August contract traded at a discount of $9.33 to Brent for the same month, set for the biggest discount since late May.
“I am fairly confident that the fundamentals are going in the right direction,” Saudi’s Al-Falih said on the sidelines of a G-20 ministerial meeting on energy and environment. His comments came after the International Energy Agency forecast global supplies will expand far more than demand next year, putting further pressure on Organisation of Petroleum Exporting Countries.
Saudi Arabia’s Crown Prince Mohammed bin Salman said the international community needs to take a firm stance against Iran after the maritime attacks as well as strikes on Saudi oil facilities and an airport, according to the newspaper interview published Sunday. Iran has denied culpability.