Oil markets steady as Opec+ cuts offset by Iran

London — Oil steadied on Tuesday after a two-day rally as decision by most of the main producers to cut output in October was balanced by concern about a weak economic outlook and the prospect of more interest rate hikes.

The Organization of Petroleum Exporting Countries and allies led by Russia, known as Opec+, decided to cut output targets by 100,000 barrels a day after Saudi Arabia voiced concern about a slump in prices since June.

Brent crude was down 26c, or 0.3%, to $95.48 at 8.15 GMT. West Texas Intermediate headed higher to $89.19, an increase of $2.32 or 2.7% from Friday’s close. There was no settlement on Monday, the US Labor Day holiday.

“The decision to reverse the 100,000 bbl/day increase in September was more symbolic than fundamentally significant,” said Craig Erlam, an analyst at Oanda. “But it will make traders think twice about driving prices lower in the way they have recently.”

As a result of the US holiday, weekly US inventory reports from the American Petroleum Institute and Energy Information Administration will be released on Wednesday and Thursday, a day later than usual.

Oil soared close to an all-time high of $147/bbl in March after Russia’s invasion of Ukraine worsened supply concerns. Concern of a recession in the West, soaring inflation and interest rate hikes have since weighed on sentiment.

The European Central Bank will meet on Thursday to discuss interest rate actions. A US Federal Reserve meeting follows on September 21.

Also lending oil some support were signs that an agreement to resurrect Iran’s nuclear deal with world powers was less imminent, delaying any return of about 1-million barrels a day to the market.

Josep Borrell, the EU’s policy chief said on Monday he was less hopeful about a quick revival of the deal.

Reuters