Oil is rising and all scenarios are on the table

Oil prices rose 1 percent on Monday as expectations that OPEC will cut production if needed to support prices, conflict in Libya and increased demand amid rising natural gas prices in Europe helped offset bleak growth prospects in the United States.

The US light NYMEX crude rose during these moments of trading today, Monday, towards levels of 94.33, before trimming part of its gains, as it hovered near the levels of 94 dollars per barrel, with gains within the limits of a dollar.

On the other hand, the benchmark Brent crude fell, surpassing the levels of $100 per barrel, before giving up some of its gains, as it hovered near the levels of $99.75 per barrel, up less than 1%.

By the end of last week, Brent crude contracts rose by 1%, or the equivalent of $1.65, at $99 a barrel, recording a weekly gain of 4.4%.

The price of US NYMEX crude also rose 0.6%, or 54 cents, to close at $93.06 a barrel, rising by 2.9% this week.

Violent clashes in the Libyan capital that killed 32 people over the weekend have raised fears the country is sliding into an all-out conflict that could once again disrupt crude supplies from the Organization of the Petroleum Exporting Countries (OPEC).

Both benchmarks traded lower earlier on Monday as the dollar rose after US Federal Reserve Chairman Jerome Powell commented that the United States faces a prolonged period of slow growth amid rising interest rates.

Hints from Saudi Arabia boosted oil prices, other members of the Organization of the Petroleum Exporting Countries and allies called the OPEC+ cartel, that they might cut production to balance the market.

A source familiar with the matter told Reuters on Friday that the UAE agreed with what Saudi Arabia thinks about production policy. At the same time, the Omani Oil Ministry said it supported OPEC+ efforts to maintain market stability.

Sources said last week that OPEC would consider cutting production to offset any increase by Iran in the event of lifting oil sanctions imposed on it if Tehran agreed to revive the nuclear deal.

OPEC+ member states, including Iraq, Venezuela and Kazakhstan, expressed a wave of support on Friday over readiness within the 23-nation oil production alliance to intervene and restore balance in the oil market.

A week ago, Saudi Arabia said the organization could cut production “at any time”, after Kuwaiti Secretary-General Haitham Al-Ghais hinted that curbing production might be an option to rebalance the market.

‘Balance’ is the watchword for OPEC+ production cuts, a situation everyone sees as necessary when oil prices are at risk of continuing decline. As a result, global benchmark Brent crude has fallen from a high of nearly $140 a barrel in March to just around $100. Meanwhile, US crude oscillates below $95, from highs above $130 six months ago.

Driving the fall in prices is the ongoing negotiation by the Biden administration to settle its differences with Iran and enable a return to crude oil exports from this sanctioned country.

Last week, Saudi Energy Minister bin Salman flagged the possibility that OPEC+ nations could cut production to counter the falling price due to what they called “disconnect” between supply and demand and the potential return of crude exports from Iran.