Reduced Middle Eastern Production Raises Oil Prices to $56

Oil prices approached $56 on international markets on Tuesday after new data showed that Middle Eastern exporters further reduced production in line with an agreement aimed at reducing the supply surplus.

In London, the price of a barrel rose by 31 cents compared to the previous close, reaching $55.79. In the U.S. market, barrels traded at a price 44 cents higher, at $50.35.

Market sentiment remains supported by last week’s optimistic demand forecasts from the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). The IEA revised its demand estimates upward for this year, while OPEC estimates that the market will need more of their oil next year.

>>>Oil Prices at Highest Level in Nearly Five Months

Their reports were complemented by today’s announcement from Iraq that they have reduced production by about 260,000 barrels per day, more than agreed upon at the OPEC level and among the group of independent producers, including Russia.

Yesterday, official data showed that Saudi oil exports in July fell to their lowest level in three years. Additionally, prices were supported by a weaker dollar, which enhances the purchasing power of holders of other currencies and thus increases demand for oil, traders remind.

>>>Dollar at New Highest Level in Eight Weeks Against Yen, Focus on Fed Meetings

– The upward trend in oil prices has been driven by several factors, such as increased oil demand in OPEC and IEA estimates, the summer decline in Saudi Arabia’s exports to the lowest level in three years, and – last but not least – the further weakening of the U.S. dollar, explains Frank Schallenberger from LBBW.

Traders are still closely monitoring Hurricane Maria’s movement in the Caribbean. Although it is still far from the U.S. oil production center in the Gulf of Mexico, it could reduce oil demand and disrupt maritime trade routes.

Separately, OPEC reported that the price of its reference basket of oil remained almost unchanged on Monday compared to the previous working day, at $53.78.