Brent crude hit $104.09 per barrel on Monday, up $2.98 or 3.1%, as supply took center stage on the market, with the prospect of additional output cuts gaining traction and fatal confrontations in Libya raising fears about Libyan oil supplies.
In addition, the price of US West Texas Intermediate (WTI) oil rose $3.95, or 4.2%, to $97.01 per barrel.
Last week, the Brent recovered to the $100 level and has remained there for the majority of the past five days after Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, stated that the Organization of Petroleum Exporting Countries and allies (OPEC+) was ready to cut production at any time and in any form if it believed it would bring stability to the “schizophrenic” oil market.
Following the Saudi signal, Congo’s Hydrocarbons Minister Bruno Jean-Richard Itoua, OPEC’s rotating president for this year, also signaled support for prospective reduction.
The United Arab Emirates (UAE) shares similar views on crude oil markets to Saudi Arabia, as speculation grows about whether the OPEC+ group will explore new output curbs.
Other OPEC+ producers, such as Iraq, Venezuela, and Kazakhstan, have expressed support for additional production limits.
OPEC+ meets on September 5 at a regular meeting, but it’s not a given yet that it would discuss new production cuts.
Another supply concern came this weekend from Libya, the most volatile OPEC producer and one exempted from the OPEC+ cuts due to its dire security situation.
Clashes between rival factions in the capital Tripoli left at least 32 people dead and dozens more wounded this weekend, stoking renewed concern of a larger military conflict that could choke Libya’s oil exports, again.
Oil’s gain was limited by a strong US Dollar, which hit a 20-year high on Monday after the Federal Reserve chairman signalled that interest rates would be kept higher for longer to curb inflation.
While a strong greenback grips the market, the undersupply issue in the oil markets will probably continue to support the market with possibilities of the OPEC+ group’s next move and the volatile situation in Libya overshadowing concerns about the global economy on Monday.
Nations that are members of the International Energy Agency could release more oil from strategic petroleum reserves (SPR) if they find it necessary when the current scheme expires, the head of the agency, Mr Faith Birol said on Monday.