Global Oil Prices Fall To $96.48/Barrel As OPEC+ Mulls Output Cut

The global oil benchmark, brent crude oil, fell to $96.48 per barrel after declining by 24 cents or 0.25 per cent.

This is as Saudi Arabia’s warns that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) could cut output against the possibility of a nuclear deal that could return sanctioned Iranian oil to the market.

Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ has the commitment, flexibility, and means to deal with challenges and provide guidance including cutting production at any time and in different forms.

He said the group stands ready to cut output to correct a recent oil price decline driven by poor futures market liquidity and macro-economic fears, which have ignored extremely tight physical crude supply.

OPEC+ agreed to increase output by 648,000 barrels per day each in July and August as they fully unwind nearly 10 million barrels per day of cuts implemented in May 2020 to counter the COVID-19 pandemic.

The group agreed earlier this month to raise production quotas by another 100,000 barrels per day in September as it faced pressure from major consumers including the US which is keen to cool prices.

Only Saudi Arabia and the United Arab Emirates are believed to have spare capacity and the ability to increase production in a meaningful way.

Meanwhile, the leaders of the United States, Britain, France, and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could allow sanctioned Iranian oil to return to global markets.

Also, the US Federal Reserve is expected to raise rates by 50 basis points in September amid expectations inflation has peaked and growing recession worries in the world’s largest oil-consuming nation.

Also pressuring prices were worries over slowing fuel demand in China, the world’s largest oil importer, partly because of a power crunch in the southwest.

The world’s largest importer cut its benchmark lending rate on Monday as part of measures to revive an economy affected by a property crisis and a resurgence of COVID-19 cases.

The Dollar index rose to a five-week high on Monday. A stronger greenback is generally bearish as it makes it more expensive for buyers with other currencies in the dollar-denominated oil market.