Oil prices edged up to near multi-week highs on Monday as OPEC indicated it was likely to maintain production cuts that have helped boost prices this year, while escalating Middle East tensions provided further support.
Brent crude was up by 21 cents at $72.42 a barrel by 1352 GMT, having earlier touched $73.40, the highest since April 26.
U.S. West Texas Intermediate crude was up 15 cents at $62.91 a barrel, after hitting a three-week high of $63.81.
Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market”.
United Arab Emirates Energy Minister Suhail al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not the right decision.
OPEC data indicates oil inventories in the developed world rose by 3.3 million barrels month-on-month in March, and were 22.8 million barrels above their five-year average.
A gathering of the so-called Joint Ministerial Monitoring Committee (JMMC) in Saudi Arabia over the weekend did not make any solid recommendations, leaving a decision on policy for a meeting of OPEC and its allies next month in Vienna.
“While not explicitly mentioned in the statement (of the JMMC), uncertainty on how many Iranian and Venezuelan oil barrels will be lost due to U.S. sanctions was probably the main reason the group kicked the can down the road,” UBS analyst Giovanni Staunovo said.
OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) from Jan. 1 for six months to try to prevent inventories from increasing and weakening prices.
Adding to the bullish sentiment is rising tensions in the Middle East.
U.S. President Donald Trump threatened Tehran on Sunday, tweeting that a conflict would be the “official end” of Iran, while Saudi Arabia said it was ready to respond with “all strength” and it was up to Iran to avoid war.
The rhetoric follows last week’s attacks on Saudi oil assets and the firing of a rocket on Sunday into Baghdad’s heavily fortified “Green Zone” that exploded near the U.S. embassy.
Another bullish signal for crude was a second week of declines in U.S. drilling operations, with energy companies cutting oil rigs to the lowest since March 2018.
The rig count, an early indicator of future output, fell by 3 to 802, General Electric Co’s Baker Hughes energy services unit said on Friday.