Crude futures in New York rose crossed the $75 per barrel threshold for the first time since 2018 as Opec+ convened to consider bringing more supply back to the markets.
West Texas Intermediate, the key gauge for US crude grades, rose 2.35 per cent to reach $75.20 per barrel at 3.23pm UAE time. Brent, the international crude benchmark, also rose 1.77 per cent to reach $75.94 per barrel.
The benchmarks traded higher as Opec+, the group led by Saudi Arabia and Russia is considering returning an estimated 2 million bpd back to the markets between August and December. Media reports suggest the group, which helped stabilise markets by agreeing to a historic production cut deal last year at the height of the Covid-19 crunch, could extend cuts beyond April 2022.
"The alliance has already helped stoke Brent oil prices beyond $75 per barrel and the producers group is well aware of the impact its policies have on prices," said Louise Dickson, oil markets analyst at Rystad Energy.
"Prices are also rising as initial leaks suggest that Opec+ is considering a 2 million bpd output hike from August through December, with a monthly increase of below 500,000 bpd," she added.
Should the group adopt "a conservative stance" and increase its production in a cautious manner, by bringing 500,000 bpd back to markets, prices will remain supported, amid sufficient demand, Ms Dickson said.
The recent rally in oil prices, fuelled by the possible delay in the return of Iranian crude to the market following the election of hardliner Ebrahim Raisi as president, could well continue, said Jean-Pierre Durante, head of applied research at Pictet & Cie.
The Swiss bank sees Brent testing $85 per barrel by the third quarter before cooling down to $72 per barrel by year-end.
Pictet & Cie significantly revised its estimates of Brent from earlier forecast of $69 per barrel for 2021 and $65 per barrel at the end of 2022.