New York — Oil prices rose to multi-week highs on Monday as OPEC indicated it was likely to maintain production cuts that have helped boost prices this year, while escalating Middle East tensions provided further support.
Brent crude futures rose 45 cents to $72.66 a barrel by 11:00 a.m. EDT (1500 GMT), having earlier touched $73.40, their highest since April 26.
U.S. West Texas Intermediate crude futures gained 47 cents to $63.23 a barrel, after hitting $63.81, the highest since May 1.
Saudi Energy Minister Khalid al-Falih said on Sunday there was consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of what he called a fragile market.
OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) from Jan. 1 for six months to try to prevent inventories from increasing and weakening prices.
A gathering of the so-called Joint Ministerial Monitoring Committee (JMMC) in Saudi Arabia over the weekend did not make any solid recommendations, leaving a decision on policy for a meeting of OPEC and its allies next month in Vienna.
“The OPEC factor appears alive and well as a supportive element if the weekend ministerial meeting was any indication. The Saudis are favoring sustained output restraint, likely through year’s end,” said Jim Ritterbusch, president of Ritterbusch and Associates.
United Arab Emirates Energy Minister Suhail al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not the right decision.
OPEC data indicated oil inventories in the developed world rose by 3.3 million barrels month-on-month in March, and were 22.8 million barrels above their five-year average.
Adding to the bullish sentiment were rising tensions in the Middle East.
U.S. President Donald Trump threatened Tehran on Sunday, tweeting that a conflict would be the “official end” of Iran, while Saudi Arabia said it was ready to respond with “all strength” and it was up to Iran to avoid war.
The rhetoric follows last week’s attacks on Saudi oil assets and the firing of a rocket on Sunday into Baghdad’s heavily fortified “Green Zone” that exploded near the U.S. embassy.
Britain told Iran on Monday not to underestimate the resolve of the United States, warning that if American interests were attacked then the Trump administration would retaliate.