Brent Oil Climbs Above $100 a Barrel Amid Talk About OPEC Cuts

Brent Oil Climbs Above $100 a Barrel Amid Talk About OPEC Cuts
An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang Province, China, on July 18, 2022. (CNS photo via Reuters)

LONDON—Benchmark Brent oil climbed above $100 a barrel on Wednesday after Saudi Arabia suggested this week that OPEC could consider cutting output in response to poor liquidity in the crude futures market and fears about a global economic downturn.

Brent for October settlement reached a three-week high, trading up $1.30, or 1.3 percent, at $101.52 a barrel by 0850 GMT. U.S. crude was up $1.18, or 1.3 percent, at $94.92 a barrel.

Contracts for both crudes soared on Tuesday after Energy Minister Prince Abdulaziz bin Salman flagged the possibility of cutting production amid poor futures market liquidity and macro-economic fears.

“The oil price and supply outlook suggest that an OPEC+ cut is not currently warranted,” PVM analyst Stephen Brennock said, outlining possible threats to supply underpinning the market.

“Global oil supply could take a hit as peak U.S. hurricane season approaches,” he said. “Elsewhere, future supply outages in Libya cannot be discounted while Nigeria’s oil fortunes show little sign of improving.”

Analysts had estimated a drop in U.S. crude stockpiles by 900,000 barrels in a Reuters poll.

U.S. government figures are due out on Wednesday.

Market participants will be watching Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole central bank symposium on Friday. He is expected to stress the Fed’s focus on controlling inflation.

By Shadia Nasralla