Oil prices skyrocket more than $2 ahead of OPEC+ meeting

Oil prices increased over $2 a barrel on Monday, extending gains as investors eyed possible moves by OPEC+ producers to cut output and support prices at a meeting later in the day.

Brent crude futures rose by $2.43, or 2.6 percent to $95.45 a barrel by 0850 GMT after rising 0.7 percent on Friday. U.S. West Texas Intermediate crude rose $2.21, or 2.5 percent at $89.08 after a 0.3 percent gain in the previous session.

U.S. markets are closed because of a public holiday on Monday.

At their meeting on Monday, OPEC and its allies will talk about oil output cuts of 100,000 barrels per day among other options, sources from the group told Reuters.

“The group is expected to leave output targets unchanged, but it’s likely that a cut will be at least discussed; which, if followed through on, would create more volatility and uncertainty at a time of considerable unease,” senior market analyst Craig Erlam at OANDA stated.

Russia does not support a production cut at this time and the producer group is likely to decide to keep output steady according to a report of the Wall Street Journal on Sunday.

Oil prices decreased in the past three months from multi-year highs hit in March, pressured by concerns that interest rate increases and COVID-19 curbs in parts of China could slow global economic growth and dent oil demand.

Lockdown measures in China’s southern technology hub of Shenzhen declined on Monday as new infections showed signs of stabilisingm though the city remains on high vigilance.

In the meantime, talks to revive the West’s 2015 nuclear deal with Iran, eventually providing a supply raise from Iranian crude returning to the market, has hit a new snag.

The White House on Friday rejected Iran’s demand for a deal to be linked with closure of investigations by the U.N. nuclear watchdog, according to a Western diplomat.