Oil Settles Above $50 as Iran Lobbies Non-OPEC Members

Oil surged more than 1 percent on Monday, October 3, with Brent settling above $50 a barrel the first time since August and U.S. West Texas crude hitting three-month highs.

The surge came after Iran stressed the need for other oil producers to join the Organisation of Petroleum Exporting Countries, OPEC, in supporting the market.

Brent settled up 70 cents, or 1.4 percent, at $50.89 a barrel. It was its first close above the key $50 mark since Aug. 19. Brent earlier reached a session peak of $51.14.

U.S. West Texas Intermediate (WTI) crude closed up 57 cents, or 1.2 percent, at $48.81. Prior to settlement, it hit $49.02, its highest since July 5.

Iranian President Hassan Rouhani told his Venezuelan counterpart Nicolás Maduro in a telephone conversation that it was essential for oil producing countries to take a decision to raise the price of oil and stabilize the market, Tehran state news agency IRNA reported.

Rouhani’s remarks added to the bullish fervor in the market since Wednesday after the Organization of the Petroleum Exporting Countries announced its first planned output cut in eight years. [nL8N1C42M9]

Iran’s call to non-OPEC members helped the market to rally “because there are many who want to believe this deal will get done,” said Phil Flynn, analyst at the Price Futures Group brokerage in Chicago.

“There’s already a soft commitment from Russia that it will be part of the OPEC plan and if more non-OPEC members get on board, prices can only go higher,” Flynn added.

Oil prices rose about 7 percent in September, ending up a second straight month, after OPEC unveiled plans to reduce output to between 32.5 million and 33.0 million barrels per day.

The dollar’s retreat from session highs also enticed more buyers into oil as greenback-denominated crude became less costly to holders of other currencies.