Macro Snapshot – Japan’s Crude Steel Production Slumps 8.5% on Lower Automobile Production; Activity contracts in the euro zone

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NEW YORK: Oil prices soared more than $3 a barrel on Tuesday after Saudi Arabia floated the idea of ​​OPEC+ production cuts to support prices and with the prospect of a drop US crude stocks.

Saudi Arabia’s energy minister has said OPEC+ has the wherewithal to deal with challenges such as production cuts, state news agency SPA said on Monday, citing comments Prince Abdulaziz bin Salman made to Bloomberg.

Global benchmark Brent crude gained $3.41, or 3.5%, to $99.88 a barrel as of 10:53 a.m. EDT (2:53 p.m. GMT). U.S. West Texas Intermediate crude rose $3.74, or 4.1%, to $94.10.

“Much of the impetus behind today’s strength is driven by comments from Saudi Arabia hinting at a possible production cut in an attempt to ‘stabilize’ the market,” Jim Ritterbusch said. of oil trade consultancy Ritterbusch and Associates.

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

However, nine sources at the Organization of the Petroleum Exporting Countries told Reuters on Tuesday that OPEC+ production cuts may not be imminent and would coincide with Iran’s return to oil markets if Tehran strikes a deal. nuclear power with the West.

A senior U.S. official told Reuters on Monday that Iran had dropped some of its key demands for a deal resurrection.

Oil soared in 2022, approaching a record high of $147 in March after Russia’s invasion of Ukraine exacerbated supply problems. Fears of a global recession, rising inflation and weakening demand have since weighed on prices.

While the price of Brent crude oil futures has fallen sharply from this year’s peak, market structure and price differentials in the physical oil market still indicate tight supply.

Underscoring the tight supply, the latest weekly US inventory reports are expected to show a 1.5 million barrel drop in crude inventories.

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