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Oil jumps 2.4% as new Saudi minister commits to output cuts, Netanyahu calls for action against Iran

Jerome Favre | Bloomberg | Getty Images

Oil prices rose more than 2% on Monday after the new Saudi energy minister, Prince Abdulaziz bin Salman, confirmed expectations that he would stick with his country's policy of limiting crude output to support prices.

Prince Abdulaziz, son of Saudi King Salman and a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), replaced Khalid al-Falih on Sunday.

"The move is bullish for oil prices," Phil Flynn, an analyst at Price Futures Group in Chicago, said in a note. "Prince Abdulaziz bin Salman is known as an oil production cutter. He has been instrumental in securing production cuts in the past."

Crude prices were also supported by comments made by Israeli Prime Minister Benjamin Netanyahu. He said Monday that Iran has a secret nuclear facility and called for action against the Middle Eastern nation. 

Brent crude futures gained $1.31, or 2.3%, to $62.58 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose $1.33, or 2.4%, to $57.85 a barrel.

Prince Abdulaziz said the pillars of Saudi Arabia's policy would not change and a global deal to cut oil production by 1.2 million barrels per day would survive.

He added that the so-called OPEC+ alliance between OPEC and non-member countries including Russia was staying for the long term.

Russia's oil output in August exceeded its quota under the OPEC+ agreements.

OPEC oil output in August rose for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran.

On Sunday, the United Arab Emirates' energy minister Suhail al-Mazrouei said OPEC and non-OPEC producers were "committed" to achieving oil market balance.

The OPEC+ deal's joint ministerial monitoring committee meets on Thursday in Abu Dhabi.

Trade and geopolitical tensions are affecting the market, Mazrouei said.

Executives at the annual Asia Pacific Petroleum Conference said on Monday they expect oil prices this year to be pressured by uncertainties surrounding the global economy, the U.S.-China trade war and increasing U.S. supplies.

Elsewhere, China's crude oil imports gained about 3% in August from a month earlier, customs data showed on Sunday, buoyed by a recovery in refining margins despite a persistent surplus of oil products and tepid demand.

The United States is "very concerned" about China's purchases of Iranian oil, Dan Brouillette, deputy secretary of the U.S. Department of Energy, said on Monday.

The United States last year withdrew from a nuclear deal that world powers had done with Iran in 2015, and reimposed sanctions to strangle Iran's vital oil trade.