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Oil’s rough week ends with rebound on OPEC+ risk, Iran setback

Sept. 2, 2022 Updated Fri., Sept. 2, 2022 at 7:53 p.m.

Storage tanks are shown at the BP Cherry Point Refinery near Blaine, Wash., on Nov. 19, 2021.   (James MacDonald/Bloomberg )
Storage tanks are shown at the BP Cherry Point Refinery near Blaine, Wash., on Nov. 19, 2021.  (James MacDonald/Bloomberg )
By Julia Fanzeres Bloomberg

Oil rose, paring a hefty weekly decline, as OPEC ministers and allies prepare to discuss crude output amid a cloudy outlook for a new Iranian nuclear accord.

West Texas Intermediate futures climbed above $89 a barrel on Friday, trimmng the weekly gain to about 6%.

Earlier in the week, oil came under pressure as tighter monetary policy and renewed anti-virus lockdowns in China spurred demand concerns.

Meanwhile, traders shrugged off an announcement by G-7 leaders of plans to cap the price of Russian crude in retaliation for Vladimir Putin’s aggression in Ukraine.

The G-7 move is largely symbolic “as the Russians are proving capable of circumventing restrictions already imposed by the G-7 countries, and hitting a record high export volume in August despite sanctions,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients.

The bullish sentiment was bolstered by a setback in negotiations over Iran’s nuclear program after the U.S. State Department said the Islamic Republic’s latest response was “not constructive.”

The talks are being closely watched by oil traders because any deal to relax sanctions could allow more Iranian crude to flow into markets.

Oil fell by more than 20% in the three months through August, erasing all of the gains since Russia’s late-February invasion of Ukraine.

The price retreat poses a challenge for the Organization of Petroleum Exporting Countries and its allies, with ministers due to meet Monday to plan output policy.

While OPEC-watchers expect the group to keep supplies steady, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman raised the possibility of a production cut in remarks last week.

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