LONDON (Reuters) – Oil prices hit eight-month highs on Monday after major producers said the global market was on its way toward rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.
The November Brent crude futures contract was up 89 cents at $57.75 a barrel by 1204 GMT, its highest since January 3.
U.S. crude for November delivery was up 53 cents at $51.28 a barrel, close to recent four-month highs.
Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.
The Iraqi government does not recognize the referendum and has called on foreign countries to stop importing Kurdish crude oil.
“If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” Commerzbank said in a note.
The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping to lift oil prices by about 15 percent in the past three months.
Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting in Vienna of the Joint Ministerial Monitoring Committee, said output curbs were helping to cut global crude inventories to their five-year average, OPEC’s stated target.
Russia’s energy minister said no decision on extending output curbs beyond the end of March was expected before January, although other ministers suggested such a decision could be taken before the end of this year.
Iran expects to maintain overall crude and condensate exports at around 2.6 million bpd for the rest of 2017, a senior official from the country’s state oil company said.
The energy minister from the United Arab Emirates Suhail al-Mazroui said the country’s compliance with OPEC’s supply cuts was 100 percent.
Nigeria is pumping below its agreed output cap, its oil minister said.
OPEC’s production cuts have been met with rising U.S. shale oil output, which has tempered the rise in U.S. oil prices relative to the increase in Brent futures.
The discount of the benchmark WTI crude contract to Brent futures widened to $6.34, the widest since August 2015. This discount has doubled in the last six weeks as U.S. crude demand has been affected by hurricane damage to U.S. refineries.
U.S. energy firms cut the number of oil rigs operating for a third week as a 14-month drilling recovery stalled.