Oil rose as Saudi Arabia signaled OPEC and its allies could extend supply cuts to the end of the year, while Venezuela’s opposition leader called for a military uprising.
Crude futures added 1.5 percent in New York. Saudi Energy Minister Khalid Al-Falih said that the Organization of Petroleum Exporting Countries and its partners remain focused on reducing oil inventories, according to an interview by RIA Novosti published on Tuesday. Last week, U.S. President Donald Trump said the kingdom agreed to raise production as he tightens sanctions on Iran. In Venezuela, the government accused Juan Guaido of planning a coup after he appeared with soldiers in a video.
Oil climbed to a six-month high last week after the White House announced tougher measures to choke off exports from Iran, ending a series of waivers that currently shields some buyers of Iran crude from American sanctions. While the Saudis pledged to assist any customers lacking supplies, the kingdom also remains committed to a pact with Russia and other producers to keep a lid on output.
“In our opinion, OPEC+ will extend its cooperation and supply management for the remainder of 2019,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
WTI for June delivery rose 94 cents to $64.44 a barrel on the New York Mercantile Exchange as of 11:54 a.m. in London. The contract closed 0.3 percent higher on Monday, snapping a three-session drop.
Brent for June settlement, which expires Tuesday, gained 95 cents to $72.99 a barrel on the London-based ICE Futures Europe exchange. The contract, which slipped 0.2 percent on Monday, was at a premium of $8.37 to WTI. The more-active July contract added 86 cents.
The producers’ group will try to reduce commercial inventories and focus on “global oil output, trying to correct it via our OPEC+ agreement, maybe from July to the end of the year,” Al-Falih told RIA in Riyadh. Most ministers involved in the current cuts agreement favor an extension, he said.
Saudi Arabia is facing a tricky task to balance the market at it needs to revive its economy, while trying to placate Trump, who wants lower prices. International Monetary Fund data show the kingdom needs crude at about $85 a barrel — well above current levels — to balance its budget this year.
Venezuela’s Guaido went to a military base in the nation’s capital to proclaim the end of socialist President Nicolas Maduro’s regime and called for a military uprising. A spokesman for the government said its soldiers would move against the opposition leader and the “small group of military traitors.”
A further deterioration of Venezuela’s output could test the ability of Saudi Arabia and its allies to make up for the loss, if their capacity has already been strained by filling the gap created by U.S. sanctions on Iran.
Other oil-market news: U.S. crude stockpiles rose by 1.5 million barrels in the week through April 26, according to a Bloomberg survey before official data due Wednesday. Turkey is seeking ways to buy more oil from Iraq, already a major supplier of crude to the Middle East’s biggest economy, as the U.S. looks to squeeze exports from Iran, according to two people familiar with the matter. Poland is using oil stockpiles to maintain normal operations at two refineries supplied by the Druzhba pipeline, which has been halted, the International Energy Agency said in a statement. Belarus expects it will take “ several months of hard work” to fully normalize crude flows via the Druzhba pipeline, a more pessimistic estimate than those coming from Russia.