Oil up as Saudi Arabia points to output cuts to clear market uncertainty

By Sibel Morrow

ANKARA (AA) - Oil prices increased on Tuesday over looming supply concerns as Saudi Arabia signaled possible output cuts if required amid extreme market volatility, which is blurring sentiment and putting downward pressure on prices.

International benchmark Brent crude traded at $97.46 per barrel at 10.08 a.m. local time (0708 GMT) for a 1.01% increase from the closing price of $96.48 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) was at $91.45 per barrel at the same time for a 1.21% gain after the previous session closed at $90.36 a barrel.

The oil market has been caught in a tussle between supply concerns and weak demand since last week amid unfolding bearish data from the world’s biggest economies, reflecting recession fears.

Saudi Arabia’a Energy Minister Abdulaziz bin Salman warned on Monday that OPEC+ could cut production to ensure market clarity if needed “as has been clearly and repeatedly demonstrated in 2020 and 2021”.

As the extremely volatile paper oil market has entered a vicious circle, Salman said it could negatively impact the operation of oil markets, energy commodities and other commodities creating new types of risks and insecurities.

Salman said OPEC+ is working on a new agreement beyond 2022 and on production cuts, as part of the current deal is scheduled to end in September 2022.

Relieving supply woes, Iran on Monday cited “good progress” in talks aimed at reviving the 2015 nuclear agreement with the West.

“But negotiations are a totality and there should be agreement on all issues,” said the country’s Foreign Ministry spokesman Nasser Kanaani, adding that the Americans have yet to reply to Iran’s response to the latest European Union proposal for a nuclear agreement.

Earlier this month, the EU submitted the “final text” for the deal aimed at unfreezing sanctions on Iran funds and oil exports in exchange for the country scaling back its nuclear ambitions.

The EU’s Foreign Policy Chief, Josep Borrell, said Monday that Iran’s response to the proposal to revive the 2015 nuclear deal was “reasonable.”