Oil prices rebounded on Tuesday after plunging to a four-year low in Monday's session prompted by the Opec+ supply boost.
Brent, the benchmark for two thirds of the world's oil, was up 3.52 per cent at 6.08pm UAE time to $62.35 a barrel, while West Texas Intermediate, the gauge that tracks US crude, was trading 3.89 per cent higher at $59.35 a barrel.
Both benchmarks fell on Monday following the Opec+ announcement over the weekend that it would speed up oil production increases for a second month in a row.
The Opec+ group of producers, led by Saudi Arabia and Russia, on Saturday said it would add 411,000 barrels a day to the market next month. The announcement followed the larger-than-planned output rise, also of 411,000 bpd, for May.
“Oil prices are seeing a technical rebound after Monday’s gap down at the open, following the weekend’s Opec+ decision to unleash another bumper-sized supply hike,” Han Tan, chief market analyst at Exinity Group, told The National.
“This rebound isn’t likely to have legs if heightened tariffs continue muddying the global demand outlook.”
Last month, US President Donald Trump announced tariffs on countries including China, the world’s second-largest economy, in a move aimed at protecting America's domestic industry and reducing the trade gap with its partners.
Following the move, the International Monetary Fund sharply lowered its near-term outlook for the world economy, with growth projected to slow from 3.3 per cent last year to 2.8 per cent this year – half a percentage point lower than its January forecast.
“Crude oil was sent on a rollercoaster ride this week,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
“The barrel of US crude fell below the $57 mark yesterday on reports that Saudi Arabia is ready to tolerate lower prices. But dip buyers quickly stepped in as Trump threatened to expand sanctions on buyers of Iranian crude.”
chief market analyst, Exinity Group
The US has been imposing more sanctions on Iranian businessmen as well as oil refineries as Washington continues its “maximum pressure” against Tehran to curb its oil revenue.
The US is also holding talks with Iran over its nuclear programme. If a deal is reached between the two countries, it could lead to a boost in supply from Iran based on the possibility of sanctions relief.
“Day-to-day moves in crude are tough to catch, but the outlook remains negative given rising supply and weakening demand prospects,” Ms Ozkardeskaya said.
