LONDON – Oil prices rose on Tuesday after Saudi Arabia said it had cut production in July, though concerns over a slowdown in global economic growth kept a lid on markets.
Benchmark Brent crude oil was up 50 cents at $73.11 a barrel by 0855 GMT. U.S. light crude gained 55 cents to $67.75.
Saudi Arabia told the Organization of the Petroleum Exporting Countries that it had reduced crude output by 200,000 barrels per day (bpd) to 10.29 million bpd in July.
OPEC itself, using secondary sources, estimated in a report published on Monday that Saudi production was at a slightly higher level of 10.39 million bpd last month.
But both figures suggest the kingdom, de facto leader of OPEC, is keen to avoid a repeat of a global glut that has depressed prices over the past few years.
“We do not think that Saudi Arabia is interested in seeing Brent crude below $70 a barrel,” said SEB commodities analyst Bjarne Schieldrop.
Saudi Arabia is OPEC’s biggest producer and the only major exporter that can easily adjust output to balance global supply.
The lower Saudi output comes at a time of expected export declines from Iran as the United States re-imposes sanctions on Tehran’s oil industry.
But output from non-OPEC countries, particularly the United States, is rising quickly, limiting demand for OPEC oil.
OPEC expects oil supply by countries outside the cartel to increase by 2.13 million bpd next year, 30,000 bpd more than forecast last month, with much of the increase coming from new U.S. shale production.
U.S. oil output from seven major shale basins is expected to rise 93,000 bpd in September to 7.52 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Monday.
Global oil demand is also rising, but not as fast as supply.
The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018.
OPEC said the demand slowdown would come on the back of potentially lower economic growth as a result of trade disputes between the United States and China as well as turmoil in emerging markets.
China’s economy is showing further signs of cooling as the United States prepares to impose even tougher trade tariffs, with investment in the first seven months of the year slowing to a record low and retail sales softening, data showed on Tuesday.