LONDON: Oil prices rose on Tuesday as tension simmered following Iran’s seizure of a South Korean vessel and as the OPEC+ group of producers were divided over February output levels.
Brent crude futures for March rose 86 cents to $51.95 a barrel by 1410 GMT, while U.S. West Texas Intermediate crude for February was at $48.51 a barrel, up 89 cents.
Both contracts fell more than 1% on Monday after OPEC+, which includes OPEC producers and others including Russia, failed to agree on a February output target.
OPEC+ is scheduled to resume talks at 1430 GMT.
Saudi Arabia has argued against pumping more because of new lockdowns that are likely to limit demand, while Russia has led calls for higher production, citing recovering demand.
An OPEC document dated Jan. 4 showed the group was studying a range of scenarios including more production, no change or cutting output by 500,000 barrels per day (bpd) in February.
“It is no secret that the bullish kick which crude markets have received through much of the last quarter (crude rose almost 30% in Q4 2020) and again this morning is supported by a particularly hands-on approach from OPEC+ to tighten crude markets and bring inventories lower through 2021,” JBC Energy analysts said in a note.
Tensions around OPEC member Iran’s seizure of a South Korean vessel continued, as Iran said the Asian country owed it $7 billion.
More bearishly, given the implications for fuel demand, England began a new lockdown on Monday as its coronavirus cases surged.
“Near-term demand growth is stalling due to the resurgence of COVID-19 across North America, Europe and the Middle East and is likely set for deeper declines over the next several months,” Fitch Solutions said, adding that Brent is expected to average $53 a barrel this year.
(Additional reporting by Shadia Nasralla and Florence Tan; editing by Barbara Lewis and Jason Neely)
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