NEW YORK–Oil gained on Friday after a US official told Reuters that an immediate Saudi oil output boost was not expected, and as investors question whether OPEC has the room to significantly ramp up crude production.
The comment during US President Joe Biden’s Middle East visit comes at a time when spare capacity at members of the Organization of the Petroleum Exporting Countries (OPEC) is running low.
“Part of the support is that everybody and their brother who digs down into the Saudi situation see that they don’t have a lot of capacity left,” said John Kilduff, partner at Again Capital LLC in New York.
Brent crude futures settled at $101.16 a barrel, rising $2.06, or 2.1 percent, while West Texas Intermediate crude settled at $97.59 a barrel, gaining $1.81, or 1.9 percent.
Both benchmarks saw their biggest weekly percentage drops in about a month, largely on fears earlier in the week that a nearing recession would chop away at demand. Brent lost 5.5 percent in its third weekly drop, while WTI was down 6.9 percent in its second weekly decline.
Biden, prompted by energy and security interests, arrived in Jeddah on Friday and had been expected to call for Saudi Arabia to pump more oil.
But the United States does not expect Saudi Arabia to immediately boost oil production and is eyeing the outcome of the next OPEC+ meeting on Aug. 3, a US official told Reuters.
“If the market was expecting an announcement between President Biden and (Saudi Crown Prince) Mohammed Bin Salman that oil production was going to be increased, they were sorely disappointed,” said Andrew Lipow of Lipow Oil Associates in Houston.
“But I do think that in the upcoming weeks, especially at an upcoming OPEC meeting, we might see production increases out of both Saudi Arabia and the United Arab Emirates.”
The United States could still secure a commitment that OPEC will boost production in the months ahead in hopes that it will provide a signal to the market that supplies are coming if necessary.
Meanwhile, the US oil rig count, an early indicator of future output, inched up by two to 599 this week to their highest since March 2020, energy services firm Baker Hughes Co said.
