Oil falls as focus turns to Opec+ meeting and poor demand

London — Oil prices fell on Tuesday as the Suez Canal reopened to traffic, while focus turned to a meeting of oil cartel Opec and allies, including Russia (Opec+), this week that is likely to agree an extension to supply curbs amid disappointing demand prospects.

Brent crude was down 50c, or 0.8%, at $64.48 a barrel by 0851 GMT. West Texas Intermediation (WTI) oil was off by 58c, or 0.9%, at $60.98 barrel.

Ships were moving through the Suez Canal again on Tuesday after tugs refloated the giant Ever Given container carrier, which had been blocking a narrow section of the passage for almost a week, causing a huge build-up of vessels around the waterway.

With concerns about a shortage of physical supplies abating, the Thursday’s meeting of Opec+ becomes even more important.

Saudi Arabia is prepared to accept an extension of production cuts to end-June, and is also ready to prolong voluntary unilateral curbs amid the latest wave of coronavirus lockdowns, a source briefed on the matter said on Monday.

“The wobble we have seen in prices means that Opec+ will likely need to take a cautious approach once again,” ING bank said. “We are of the view that the group will likely hold output levels unchanged, with Opec+ wanting to avoid another sell-off.”

Stymieing efforts to contain global supply are rising under-the-radar exports from Opec member Iran to China, which is ignoring US and UN sanctions on the country and importing higher amounts of Iranian oil, according to traders and analysts.

China may receive as much as 1-million barrels a day this month in imports from Iran passed off as crude from other origins.

A dollar rally also weighed on oil prices. As crude is priced in dollars, a stronger greenback makes the commodity more expensive to holders of other currencies.

Reuters