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Crude costs added gains on Tuesday due to OPEC production cuts.
The sources told Reuters the cuts may coincide with a return to Iranian oil materials if their nuclear deal is revived.
On Monday, Saudi Arabia’s energy minister hinted that OPEC could simply cut production as the oil market suffers a basic disconnect.
Oil costs rose on Tuesday as OPEC officials told Reuters output could be cut if Iranian materials return to the market as part of a revived nuclear deal.
West Texas Intermediate crude rose 3% to $93. 02 on news, while the foreign benchmark Brent index gained 2. 91% to $99. 20.
The initial nuclear deal reached under the Obama administration lifted sanctions on Iranian oil in exchange for freezing Tehran’s nuclear program. President Trump pulled the United States out of the deal, but efforts to revive it intensified after Joe Biden’s presidency.
Talks have shown progress in recent times, and on Monday Iran abandoned some of its main conditions, a request to foreign nuclear inspectors to close some of its investigations, according to Reuters.
Iran could potentially start selling oil in its reserves if sanctions are lifted, but the country would need about a year and a half to reach its total production capacity of four million barrels per day. Analysts have estimated that a return of Iranian oil would lead to a short-term buildup of around 1 million barrels consistent with the day in the global market.
Oil prices rose after Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told Bloomberg on Monday that a general disconnect in the crude futures market could lead the company to cut production.
Any cut in OPEC’s oil production would mark a reversal of its efforts to return production to pre-pandemic levels. In the immediate onset of covid-19 lockdowns in 2020, OPEC and its non-member partners agreed to particularly cut oil production as the call collapsed. But the call was temporarily recovered and OPEC has reactivated production for the past two years.
Read the article on Business Insider