Oil jumps $3/b to $99 on possible OPEC+ tightening as Iran deal looms

Oil prices jumped about $3 a barrel on Tuesday after Saudi Arabia floated the idea of OPEC+ output cuts to support prices in the case of returning Iranian crude and with the prospect of a drop in U.S. inventories. The Saudi energy minister said OPEC+ had the means to deal with challenges including cutting production, state news agency SPA said on Monday, citing comments Abdulaziz bin Salman made to Bloomberg.

Global benchmark Brent crude gained $2.92, or 3%, to $99.40 a barrel by 12:32 p.m. EDT.

U.S. West Texas Intermediate crude rose $2.96, or 3.3%, to $93.32. “Much of the impetus behind today’s strength is being driven by comments out of Saudi Arabia alluding to a possible output cut in an attempt to ‘stabilise’ the market,” said Jim Ritterbusch of oil trading advisory firm Ritterbusch and Associates. “Of course, from the Saudis’ perspective, stable prices equal high prices and instability equals low prices.”

In the comments reported on Monday, the Saudi minister said the paper and physical oil markets had become “disconnected”. However, nine OPEC sources told Reuters on Tuesday OPEC+ production cuts may not be imminent and would coincide with the return of Iran to oil markets should Tehran clinch a nuclear deal with the West. A senior U.S. official told Reuters on Monday that Iran had dropped some of its main demands on resurrecting a deal. Oil has soared in 2022, coming close in March to an all-time high of $147 after Russia’s invasion of Ukraine exacerbated supply concerns. Fears about a global recession, rising inflation and weaker demand have since weighed on prices.