Oil prices rose on Tuesday after Saudi Arabia said it cut production in July, adding to concerns over global supply as U.S. sanctions against Iran curb its exports.
Benchmark Brent crude oil was higher at 73.31 dollars a barrel. U.S. light crude was equally higher at 67.75 dollars.
“Oil prices are on the rebound as bulls take heart from an unexpected dip in Saudi oil output and the lingering Iranian wildcard,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Saudi Arabia told Organisation of the Petroleum Exporting Countries that it had reduced crude output by 200,000 barrels per day (bpd) to 10.29 million bpd in July.
Such figure suggests that the kingdom, de facto leader of OPEC, is keen to avoid a repeat of a global glut that has depressed prices over the past few years.
“We do not think that Saudi Arabia is interested in seeing Brent crude below 70 dollars a barrel,” said SEB commodities analyst Bjarne Schieldrop.
The lower Saudi output coincides with expected export declines from Iran as Washington re-imposes sanctions on Tehran.
OPEC expects oil supply by countries outside herl to increase by 2.13 million bpd next year to 30,000 bpd, with much of the increase coming from new U.S. shale production.
Global oil demand is also rising. OPEC expects world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018.
Analyst say trade disputes between the United States and China as well as turmoil in emerging markets could curb growth and energy demand.
China’s economy is showing further signs of cooling as the United States prepares to impose even tougher trade tariffs, with investment in the slowing and retail sales softening, data showed on Tuesday.