As OPEC+ was approaching an agreement to keep crude supply steady in February, oil prices climbed more than 4 percent on Tuesday, although tension simmered after Iran’s seizure of a South Korean vessel. Brent crude futures increased by $2.15, or 4.2%, to $53.24 a barrel by 11:10 a.m. EST Over (1610 GMT). U.S. West Texas Intermediate crude rose $2.27 to $49.89 a barrel, or 4.8 percent.
Saudi Arabia proposed to make voluntary cuts to its oil production during talks with the Organization of Petroleum Exporting Countries and others, including Russia, in February, two OPEC+ sources said. In case the Saudis are going to take charge of the load and take oil off the market, that changes the dynamic quite a bit, said Phil Flynn, senior analyst at Chicago’s Price Futures Group. It seems that as the global swing maker, the Saudis are taking the job.
Four OPEC+ sources told Reuters on Tuesday that the producer group was setting aside a potential production rise on concerns that the market could be flooded with crude if new coronavirus lockdowns further depress demand.
On Monday, both contracts dropped more than 1% after OPEC+ failed to agree on a February production target.
The group was researching a number of scenarios including more production, no shift, or cutting output by 500,000 barrels per day (BPD) in February, an OPEC document dated Jan 4 showed.
There’s nothing new in that, that the bullish kick which crude markets have received through (crude rose almost 30 percent in Q4 2020). And today on the morning is supported by a particularly hands-on approach from OPEC+ to tighten crude markets and bring inventories lower through 2021, JBC Energy analysts said in a statement.
Tensions because of the OPEC member Iran’s seizure of a South Korean vessel continued, as Iran said it owed $7 billion to the Asian nation.
Even, for the market, bearish aspects are looming on oil prices. On Monday, England started a fresh lockdown as its coronavirus cases surged. Since early last year, coronavirus lockdowns have weighed on fuel demand.