Oil rises as Saudi backs OPEC cuts to continue
Oil rose on Monday on expectations that Saudi Arabia, the world’s largest oil exporter, will continue to support output cuts by OPEC and other producers to prop up prices under new Energy Minister Prince Abdulaziz bin Salman.
Prices climbed for a fourth day and were also supported by comments from the United Arab Emirates’ energy minister that OPEC and its allies are committed to balancing the crude market.
Global benchmark Brent LCOc1 was up 61 cents, or 1 per cent, at 62.15 dollars a barrel by 0649 GMT, while U.S. West Texas Intermediate CLc1 was up 65 cents, or 1.2 per cent, at 57.17 dollars a barrel.
Salman, a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries, was named minister on Sunday, replacing Khalid al-Falih.
He is the son of Saudi King Salman.
It is the first time the energy portfolio has been handed to a member of the royal family.
He helped to negotiate the current global agreement on supply cuts between OPEC and non-OPEC countries including Russia, a group known as OPEC+.
A Saudi official said on Sunday there would be no shift in Saudi and OPEC policy.
“The change at the top doesn’t necessarily mean a shift in policy as much as it’s being viewed as a move to improve relations within OPEC and with non-OPEC producers in the wake of the latest Russian compliance fissures,” said Stephen Innes, Asia Pacific market strategist at Axi Trader.
Russia’s oil output in August exceeded its quota under the OPEC+ agreements.
UAE Energy and Industry Minister Suhail al-Mazrouei said on Sunday that members of OPEC and non-OPEC producers were “committed” to achieving oil market balance.
Trade and geopolitical tensions are affecting the market more than demand and supply, Mazrouei said, but he was quick to rule out hasty steps influenced by the trade war between the United States and China.
“The fear of slower (oil) demand is only going to happen if that tension is escalating and I am personally hopeful that is not the case,” Mazrouei told Reuters on Sunday.
Prices on Monday were also supported by a rise in oil imports in China in August,with shipments to the world’s biggest importer up three per cent from July and nearly 10 per cent higher in the first eight months of 2019 from a year earlier.
In the United States, drilling companies cut the number of operating oil rigs for a third week in a row last week.