Oil Soars on Optimism Over OPEC Deal

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Prices lifted after Iranian oil minister sounds positive note about prospects of an output cutCrude futures surged Wednesday on growing optimism that OPEC would be able to deliver a production-cut deal later in the day.

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Prices jumped after Iran’s oil minister, Bijan Zanganeh, said in Vienna that he believed Organization of the Petroleum Exporting Countries would reach a deal, though he said an immediate freeze of his country’s output wasn’t on the agenda.

An OPEC deal would be aimed at cutting into a global oversupply of oil that has severely depressed prices since 2014. A proposal would likely have the group cut production by more than a million barrels a day, which represents about 1% of the global oil supply.

The February contract in Brent crude, the global oil benchmark, was up 5.7% to $50.02 a barrel on London’s ICE Futures exchange, according to Factset. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 5.3% at $47.61 a barrel, Factset said.

“The communication this morning is extremely positive from Iran,” said Bjarne Schieldrop, a commodities analyst from Sweden’s SEB bank, adding that the market was volatile ahead of the meeting’s outcome.

Iran’s willingness to participate in some way—a long-held Saudi demand—signals a greater likelihood that all OPEC members will agree to a deal.

A successful OPEC accord is also crucial in getting non-OPEC producers—like Russia—to slash production in a collective effort to lift global oil prices. Russia has said it wouldn’t make any commitment until an agreement was forged by OPEC membersCrude futures surged Wednesday on growing optimism that OPEC would be able to deliver a production-cut deal later in the day.

Prices jumped after Iran’s oil minister, Bijan Zanganeh, said in Vienna that he believed Organization of the Petroleum Exporting Countries would reach a deal, though he said an immediate freeze of his country’s output wasn’t on the agenda.

An OPEC deal would be aimed at cutting into a global oversupply of oil that has severely depressed prices since 2014. A proposal would likely have the group cut production by more than a million barrels a day, which represents about 1% of the global oil supply.

The February contract in Brent crude, the global oil benchmark, was up 5.7% to $50.02 a barrel on London’s ICE Futures exchange, according to Factset. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 5.3% at $47.61 a barrel, Factset said.

“The communication this morning is extremely positive from Iran,” said Bjarne Schieldrop, a commodities analyst from Sweden’s SEB bank, adding that the market was volatile ahead of the meeting’s outcome.

Iran’s willingness to participate in some way—a long-held Saudi demand—signals a greater likelihood that all OPEC members will agree to a deal.

A successful OPEC accord is also crucial in getting non-OPEC producers—like Russia—to slash production in a collective effort to lift global oil prices. Russia has said it wouldn’t make any commitment until an agreement was forged by OPEC members.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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