Oil prices jump 5% on OPEC+ output talks, Iran tension | Reuters

Oil prices jump 5% on OPEC+ output talks, Iran tension | Reuters

Oil prices climbed nearly 5% on Tuesday after news that Saudi Arabia will make voluntary cuts to its oil output, while international political tension simmered over Iran’s seizure of a South Korean vessel.

Brent crude futures rose $2.51, or 4.9%, to settle at $53.60 a barrel. U.S. West Texas Intermediate crude ended $2.31, or 4.9%, higher at $49.93 a barrel.

Saudi Arabia will make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March. The cuts are part of a deal to persuade most producers from the group consisting of the Organization of the Petroleum Exporting Countries and allies to hold output steady amid concerns that new coronavirus lockdowns will hit demand.

“Saudi Arabia put the cherry on the cake and if there is one way to describe what its voluntary cut means for the market, ‘happy hour’ is a pretty fitting term,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.