Oil edges higher over supply woes triggered by possible OPEC+ output cut

ANKARA

Oil prices pared some losses on Friday after declining almost 3% in previous trade over demand concerns after China reintroduced strict lockdown measures, although fears that OPEC+ may cut production constrained further losses.

International benchmark Brent crude traded at $94.02 per barrel at 09.52 a.m. local time (0652 GMT) for a 1.79% gain from the closing price of $92.36 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) was at $88.23 per barrel at the same time for a 1.87% rise after the previous session closed at $86.61 a barrel.

Oil prices clawed back some losses made on Thursday when Brent declined below $92 a barrel with China’s recent COVID-19 restrictions prompting demand concerns.

China imposed lockdowns in two cities, including Chengdu, a vital transportation hub. Experts say the decision will likely trigger another massive shock for the Chinese economy and stagger the already weak economic growth rates.

However, prices rebounded on the last trading day of the week in anticipation of OPEC trimming production next week.

Last week, after the Saudi energy minister said the paper and physical oil markets had become “disconnected”, several other OPEC members, including Oman, supported this policy.

“Oman supports OPEC+ efforts to maintain market stability in the face of distortions and volatility,” Oman’s Oil Ministry said in a tweet last Friday.

Investors are now monitoring the next OPEC+ meeting on Sept. 5, when the group will decide on its production schedule for October.

Demand concerns further increased over reports that Saudi Arabia may slash October prices for Asian customers. The oil-rich country will lower prices for Arab Light crude for its Asian customers by $4.50.

Markets are also closely watching the ongoing negotiations between Iran and the world powers to revive the 2015 nuclear accord, which has been underway in the Austrian capital Vienna since April last year.

Josep Borrell, the EU foreign policy chief and coordinator of indirect talks between Iran and the US, proposed a new draft proposal after the latest round of talks in Vienna last month, which came after a five-month hiatus.

In the last line of several steps, Iran submitted its response to US comments on a European Union draft proposal, calling it a "constructive approach" to finalize negotiations.