NEW YORK (CNBC) - Oil rose Monday as potential OPEC+ output cuts and conflict in Libya helped to offset a strong U.S. dollar and a dire outlook for U.S. growth.
Saudi Arabia last week raised the possibility of production cuts, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West.
Brent crude rose 2.5% to $103.51 per barrel, extending last week’s 4.4% gain. U.S. West Texas Intermediate (WTI) crude was 3.2% at $96.03 after rising by 2.5% last week.
“Oil prices are inching higher on hopes of a production cut from OPEC and its allies to restore market balance in response to the revival of Iran’s nuclear deal,” said Sugandha Sachdeva, vice president of commodity research at Religare Broking.
OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on Sept. 5.
The price of crude oil has surged this year, with Brent coming close to a record high of $147 in March as Russia-Ukraine war exacerbated supply concerns. Rising fears over high interest rates, inflation and recession risks have since weighed on the market.
Oil’s gain was limited by a strong U.S. dollar, which hit a 20-year high on Monday after the Federal Reserve chairman signalled that interest rates would be kept higher for longer to curb inflation.
“While a strong dollar restrains broad commodity prices, the undersupply issue in the oil markets will probably continue to support the upside bias,” said CMC Markets analyst Tina Teng.
Unrest in Libya’s capital at the weekend, resulting in 32 deaths, sparked concern that the country could slide into a full-blown conflict and disrupt in oil supply from the OPEC nation.