Oil holds advance after OPEC+ delivers modest cut in production

Oil held a gain after OPEC+ coupled a modest supply cut with a warning the grouping stands ready to do more if needed in the fourth quarter.

West Texas Intermediate traded near $89 a barrel in early Asian trade, 2.4 per cent higher than Friday’s close after no settlement in the week’s opening session.

The Organization of Petroleum Exporting Countries and allies including Russia agreed on a 100,000 barrel a day cut in supply quotas, surprising traders who had largely expected there would be no change. Saudi Arabia said the group was willing to take additional action to support the global crude market.

Gains on Monday were aided by a setback in Iranian nuclear talks. The European Union’s top diplomat Josep Borrell played down the chance of a rapid revival of the deal, dimming prospects for a swift return of Iranian supply.

Crude has slumped since early June, erasing all of the gains made after the Russia-Ukraine crisis, as signs of a global slowdown and tighter monetary policy threatened to sap energy demand. A rise in the dollar also hurt prices. That decline prompted OPEC+ to pivot to removing barrels from the global market, switching tack from restoring supply cuts imposed during the pandemic.