Oil prices gained more than 1 percent on Tuesday amid output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, although gloomy economic prospect is expected to put a strain on demand.
Global benchmark Brent crude oil futures rose 1.3 percent from their last close to $59.80 per barrel, before easing to trade up 05 percent to $59.33 a barrel.
US West Texas Intermediate (WTI) crude futures advanced 0.5 percent to $50.78 per barrel, having climbed 1.4 percent to $51.23 per barrel earlier in the session.
OPEC-led cuts and declining US rig counts have bolstered market sentiment in the New Year, according to a Singapore-based brokerage firm.
The Middle East-dominated producer group of the OPEC and some non-OPEC countries, including Russia, established a deal last year to reduce supply to curb global glut.
Meanwhile, rig counts in the US dropped from a 2018-peak of 888 to a still high amount of 873 in early 2019, suggesting weaker production growth which climbed above 2 million barrels per day (bpd) last year, bringing US crude output to a record 11.7 million bpd.
The US in November reemployed sanctions against Iran’s oil exports. Washington then approved sanctions waivers, which were only valid for 180 days, to some countries that rely heavily on Iran as their supplier, but those were not enough to stop the Middle Eastern country’s exports from falling.
A British bank stated that Iranian exports have already fallen sharply and are likely to remain at around 1.3 million bpd in 2019, 1.3 million bpd down versus their 1H18 average.
However, a Tokyo-based publication group reported on Tuesday that Japan expects to resume oil imports from Iran this month, with some domestic banks informing customers they will restart transactions for oil purchases.
South Korea also expects to receive Iranian oil imports in January after a fourth-month delay.