Oil prices climb more than $1/bbl ahead of OPEC+ meeting

Oil prices jumped over $1 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 $1.88, or 2%, to $94.90 a barrel by 0345 GMT after gaining 0.7% on Friday. US West Texas Intermediate crude was at $88.60 a barrel, up $1.73, or 2%, following a 0.3% advance in the previous session.

US markets are closed for a public holiday on Monday.

At their meeting later on Monday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, may decide to keep current output levels or even cut production to bolster prices, despite supplies remaining tight. read more

"OPEC+ will most likely keep output tight enough to retain the oil price amid demand disruptions that were sparked by the renewed lockdowns in some parts of China," said Tina Teng, an analyst at CMC Markets.

Russia, the world's second-largest oil producer and key OPEC+ member, does not support a production cut at this time and it is likely the group will keep its output steady when it meets Monday, the Wall Street Journal reported on Sunday, citing unidentified people familiar with the matter. 

"While we expect the group to keep output unchanged, the rhetoric may be bullish as it looks to arrest the recent fall in prices," ANZ analysts said in a note.

Despite the possibility for output cuts, CMC's Teng pointed out that downside risks also remain, naming potential exports from Iran amid its ongoing nuclear deal negotiations and recession fears as two such risks.

Oil prices have fallen in the past three months, after touching multi-year highs in March, on concerns that interest rate hikes and Covid-19 curbs in parts of China, the world's top crude importer, may slow global economic growth and cool oil demand. read more

Currently, 33 cities in China are under partial or full lockdowns, affecting more than 65 million residents, according to a local media estimate, as the world's second-largest economy sticks to its stringent zero-Covid policy.

Negotiations to revive the West's 2015 nuclear deal with Iran have dragged on thoughan agreement that could allow Tehran to increase exports and improve global supplies.

The White House on Friday rejected linking the deal with the closure of investigations by the UN nuclear watchdog a day after Iran reopened the issue, according to a Western diplomat.