On August 24, Brent crude oil futures rose 3.19%. Nine OPEC sources said that the OPEC+ production cuts considered by Saudi Arabia this week may not come soon. If Iran and the West reach a nuclear agreement, the production cuts may return with Iranian oil. The market synchronised and oil prices rose sharply as a result.
Crude inventories fell by 5.632 million barrels in the week ended Aug. 19, the largest drop since the week ended Feb. 25, 2022, according to earlier data from API; gasoline inventories edged up by 268,000 barrels; finished goods Oil inventories rose by 1.051 million barrels. The two major crude oil benchmarks edged higher after the data.
It may be too early to announce production cuts at the OPEC+ meeting on Sept. 5, but it may be necessary if the possible restart of the 2015 Iran nuclear deal increases oil markets, the sources said.
OPEC+ should be planning ahead and should think about the next move for Iranian oil to return to the market after sanctions are lifted.
This week, a senior U.S. official said that Iran had dropped some key requirements for reviving the nuclear deal, greatly raising the prospect of a deal. However, Iran may start selling some of its previously stored oil within a relatively short period of time, the sources said. The rise in oil supplies comes as OPEC+ is expected to begin negotiations to renew its partnership in 2022.
Currently, Iran is not bound by the OPEC+ production-limiting agreement and may continue to be limited even if it initially increases production.