Oil prices rose by about 5% on Tuesday after news that Saudi Arabia would cut voluntary production and increase international political tensions over Iran’s seizure of a South Korean vessel.
The Brent crude futures contract closed at $ 2.51, or 4.9%, at $ 53.60 a barrel. United States oil (WTI) advanced $ 2.31 or 4.9% to $ 49.93 a barrel.
Saudi Arabia will make additional voluntary cuts of 1 million barrels per day (bpd) for oil production in February and March. The move is part of an agreement to convince producers in the Organization of Petroleum Exporting Countries (OPEC) and to keep allies pumped up amidst steady concerns that new coronovirus-related lockdowns will affect demand.
“Saudi Arabia has put icing on the cake, and if there is a way to tell what markets these voluntary cuts represent, then ‘Happy Hour’ is a very favorable term,” Ristad Energy’s head of oil markets Tonhugen said. .
An internal OPEC + document seen by Reuters on 4 January highlighted the risks of the recession and warned that “the resumption of containment measures by Kovid-19 on all continents, including a total lockdown, is affecting the recovery in oil demand. 2021. “
Meanwhile, tensions continue over Iran’s seizure by a South Korean ship – an OPEC member. On Tuesday, Iran denied that it would hold South Korea’s ship and its crew members hostage, the day after seizing a tanker under pressure from the Gulf for Seoul, the U.S.-imposed To release $ 7 billion in funds frozen by sanctions. .
(Reporting by Stephanie Kelly; Additional reporting by Noah Browning, Shadia Nasrallah and Florence Tan)