Major oil producers said they were optimistic that the cut-off agreement would be extended, with crude oil futures closing higher in June.
West Texas Light Crude Oil (WTI) futures for August delivery on the New York Mercantile Exchange rose $0.62 to close at $59.09 a barrel, up 1.1%, hitting a high of $60.28 a barrel. According to data from the Dow Jones Market Data Group, WTI futures prices rose 9.3% in June trading on spot contracts.
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Meanwhile, Brent crude oil futures for August delivery on the London ICE European Futures Exchange rose $0.32 to close at $65.06 a barrel, up 0.5%, hitting a high of $66.75 a barrel. Brent’s oil price rose 3.2% in June trading on spot contracts.
According to foreign media reports, Saudi Arabia’s energy minister Khalid al-Falih said that most OPEC member countries would like to extend the cut agreement for nine months. Earlier in the day, Bijan Zanganeh, Iran’s oil minister, said in an interview that he would support a nine-month extension of the cut.
Earlier, Russian President Vladimir Putin announced last weekend that Russia had reached an agreement with Saudi Arabia to extend the cut for six to nine months. Putin met with Saudi Crown Prince Mohammed Bin Salman at the G20 summit in Japan and said: “We will support an extension of the cut-off agreement, as will Russia and Saudi Arabia.” He added: “As far as the extension is concerned, we have not yet decided whether to extend it for six months or nine months, maybe nine months. “
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Suhail al-Mazrouei, the Minister of energy and industry of the United Arab Emirates, also said in an interview that it might be necessary to extend an agreement reached in December last year to reduce production by 1.2 million barrels a day, which expired last Sunday.
Marshall Steeves, an energy market analyst at Informa Economics, told MarketWatch, the US financial media, that after Putin’s meeting with Saudi Crown Prince Mohammed Ben Salman, the extension of the cut-off agreement for six to nine months seems to be in place. “Of course, this requires the overall approval of the organization, but with Iran and other countries agreeing to cut production, this decision seems likely to be adopted. However, the OPEC + decision still needs to be considered, because the only question now is whether Russia will agree. He said.
OPEC Member States and non-OPEC oil-producing countries such as Russia are gathering in Vienna to renegotiate production reduction agreements, which will hold ministerial meetings on Tuesday.
Earlier this month, Iran shot down an American surveillance drone over the Strait of Hormuz. Some analysts believe that this situation may lead to the disruption of crude oil flow and transportation in the region and increase tensions between the United States and Iran. Since 2017, OPEC and its allies have been cutting crude oil production to prevent oil prices from falling amid soaring U.S. production. This year, the United States has surpassed Russia and Saudi Arabia as the world’s largest crude oil producer.
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Oilfield service provider Baker Hughes reported earlier on Friday that the number of active crude oil drilling platforms in the United States increased by four this week to 793, up from one last week. The data from Beckhughes can provide clues to future U.S. crude oil production. The increase in the number of drilling platforms means that production may rise, which is usually a negative factor for oil prices.
In other energy trades on the New York Mercantile Exchange, the price of RBOB gasoline futures for July delivery rose 1.8% to $1.931 a gallon, up 7.8% in June, heating oil futures for July delivery rose 0.7% to $1.954 a gallon and 5.6% in June. Gas futures prices fell 4.1 cents to $2.267 per million UK heat units, a 1.8% drop, and fell by about 6% in June.