Oil prices jumped on Aug. 14 after Saudi Arabia said it cut production, adding to concerns over global supply as U.S. sanctions against Iran curb its exports, though the prospect of a slowdown in global economic growth kept a lid on markets.
Global benchmark Brent crude LCOc1 rose $1.14 to a high of $73.75 a barrel before easing back. The price was up almost 1.4% at about $73.61 at 1205 GMT (8.05 a.m. ET) and U.S. light crude CLc1 was up 90 cents at $68.10.
“Oil prices are on the rebound as bulls take heart from an unexpected dip in Saudi oil output and the lingering Iranian wildcard,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Saudi Arabia told the OPEC that it had reduced crude output by 200,000 barrels per day (Mbbl/d) to 10.29 million barrels per day (MMbbl/d) in July.
OPEC itself, using secondary sources, estimated in a report published on Aug. 13 that Saudi production was at a slightly higher level of 10.39 MMbbl/d last month.
But both figures suggest the kingdom, de facto leader of OPEC, is keen to avoid a repeat of a global glut that has depressed prices over the past few years.
“We do not think that Saudi Arabia is interested in seeing Brent crude below $70 a barrel,” said SEB commodities analyst Bjarne Schieldrop.
The lower Saudi output coincides with expected export declines from Iran as Washington reimposes sanctions on Tehran.
But output from non-OPEC countries, particularly the U.S., is rising quickly, limiting demand for OPEC oil.
OPEC expects oil supply by countries outside the cartel to increase by 2.13 MMbbl/d next year, 30 Mbbl/d more than forecast last month, with much of the increase coming from new U.S. shale production.
U.S. oil output from seven major shale basins is expected to rise 93 Mbbl/d in September to 7.52 MMbbl/d, the U.S. Energy Information Administration said on Aug. 13.
Global oil demand is also rising, but not as fast as supply.
OPEC expects world oil demand to grow by 1.43 MMbbl/d in 2019, down from 1.64 MMbbl/d in 2018.
Analyst say trade disputes between the U.S. and China as well as turmoil in emerging markets could curb growth and energy demand.
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