Oil rose on Friday — paring a hefty weekly decline — before an OPEC+ meeting on supply at which Saudi Arabia could push for output cuts, and as efforts to revive an Iranian nuclear accord suffered a setback.
West Texas Intermediate climbed above $88 a barrel, after slumping almost 11% over the prior three days. Crude has come under pressure this week as tighter monetary policy and renewed anti-virus lockdowns in China spurred concern that consumption will weaken. The dollar’s jump to an all-time high has also weighed on prices in the run-up to Monday’s OPEC+ gathering.
Oil fell by more than a fifth in the three months through August, erasing all of the gains since Russia’s invasion of Ukraine. The retreat poses a challenge for the Organization of Petroleum Exporting Countries and its allies, with ministers due to meet on Monday to plan output policy. While OPEC-watchers expect the group to keep supply steady, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman raised the possibility of a production cut in remarks last week.
“After the massive losses of the past three sessions, we may see some consolidation,” said Vandana Hari, founder of Vanda Insights in Singapore. “Our base case is a rollover by OPEC+ for October, but traders may be cautious not to short crude further until the outcome of Monday’s meeting is known.”
WTI for October delivery rose 1.6% to $88.03 a barrel on the New York Mercantile Exchange at 6:44 a.m. in London.
Brent for November settlement climbed 1.6% to $93.85 a barrel on the ICE Futures Europe exchange.
Traders were also tracking diplomatic efforts aimed at reviving Iran’s 2015 nuclear deal, which may unlock substantial crude flows if US sanctions are lifted as part of any agreement. The US State Department said Thursday that Iran’s latest response was “not constructive.”
Widely-watched time spreads, one indicator of market tightness, have been volatile. Brent’s prompt spread — the difference between its nearest two contracts — was $1.25 a barrel in a backwardation, compared with almost $2 a barrel last Friday and 63 cents two weeks ago.
Group of Seven finance ministers including Treasury Secretary Janet Yellen are due to hold talks later Friday on a US-led plan to try to cap the price of Russian crude to choke off the flow of funds Moscow uses to finance its war in Ukraine. Earlier this week, the UK signaled its support for the proposal.