Oil bounces to two-week high as Saudi says OPEC will do ‘whatever necessary’

Crude oil futures rose Wednesday after Saudi Arabia’s energy minister said OPEC and its allies would do “whatever necessary” to support the oil market, hinting at the potential for further production cuts.

Prince Abdulaziz bin Salman said new joint oil output cuts announced this week by Russia and Saudi Arabia have proven skeptics wrong; Saudi Arabia said it would extend a July production cut of 1M bbl/day through August, while Russia said it would cut exports by 500K bbl/day.

But analysts at Morgan Stanley cut their oil price forecast, saying that while anticipating a decrease in inventories in 2023 they forecast a surplus in 2024’s H1, with non-OPEC supply growing faster than demand.

Front-month Nymex crude oil (CL1:COM) for August delivery closed +2.8% to $71.79/bbl, and September Brent crude (CO1:COM) ended +0.5% at $76.65/bbl, the highest settlement value for both benchmarks since June 21.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (DRIP), (GUSH), (USOI), (NRGU)

The U.S. Navy also said Iran attempted to seize two oil tankers near the Strait of Hormuz and fired shots at one of them before backing down.

The incident adds to concerns that “supplies are going to be very right” in this year’s H2 if a recession does not occur, Price Futures analyst Phil Flynn said.

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