Oil prices rose more than 4 per cent on Wednesday on a report that OPEC members and other producers have reached a deal to limit oil supply, though the details remained uncertain.
OPEC could announce an output-freeze deal in Algeria, although full details are unlikely to be firmed up before a formal meeting of the Organization of the Petroleum Exporting Countries in November, two OPEC sources said.
They spoke on condition of anonymity as no decision had yet been reached at OPEC’s informal meeting in Algiers.
CNBC reported that Brent crude rose $2.03, or 4.4 per cent, to $48 a barrel by 2:20 p.m. ET (1820 GMT), trading at roughly the same level as prior to the EIA data. U.S. West Texas Intermediate (WTI) crude was up $1.71, or 3.8 percent, to $46.38 a barrel.
Saudi Energy Minister Khalid al-Falih said on Tuesday that Iran, Nigeria and Libya would be allowed to produce “at maximum levels that make sense” as part of any output limits which could be set as early as the next OPEC meeting in November.
That represents a strategy shift for Riyadh, which has previously said it would reduce output only if every other OPEC and non-OPEC producer followed suit. Iran has said it should be exempted from such limits because its production is recovering after the lifting of European Union sanctions earlier this year.
Iranian Oil Minister Bijan Zanganeh said on Wednesday OPEC producers were still trying to reach a deal on output limits and that under any such pact the Islamic Republic would agree to curtail its production “at close to 4 million barrels per day.”
Iranian output has stagnated at 3.6 million bpd.
On Wednesday, Mustafa Sanalla, the head of Libya’s state-run National Oil Company, said the country’s oil production had more than doubled to 485,000 barrels a day following the reopening of oil ports this month, Dow Jones reported.
“The best that can be…hoped for at this afternoon’s meeting is the laying of foundations for a deal when the cartel next meet in November by which time Iranian oil output may well have reached the all-important 4 million barrels-per-day mark,” Stephen Brennock of brokerage PVM Oil said in a note.
U.S. commercial crude stockpiles fell by 1.9 million barrels to a total of 502.7 million barrels in the week through September 23. Analysts polled by Reuters had forecast of 3 million barrel build.