Oil climbs more than 2 percent as tight supplies in focus

By Ayenat Mersie

Brent settled up $2.11, or 2.8 percent, at $77.50 a barrel. U.S. crude gained $1.48, or 2.2 percent, to $68.21.

Oil has been pressured by reports that the Organization of the Petroleum Exporting Countries (OPEC) and Russia may ease up on output cuts in place since January 2017. The cuts have driven down global inventories and boosted prices, with global benchmark Brent reaching a 3-1/2-year high of $80.50 a barrel on May 17.

On May 25, sources told Reuters that Saudi Arabia and Russia are discussing raising oil output from OPEC and allied non-OPEC countries by around 1 million bpd.

On Wednesday, however, the Russian central bank said falling oil prices would pose a risk to the country's financial sector.

"It seems that somebody in the central bank is taking notice of the big drop in oil prices and sending a signal of, 'Hey, wait a second. We don't want these prices to fall too far,'" said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. crude's discount to Brent rose to as much as $9.31, with Brent supported as investors worried that U.S. sanctions could be cutting crude supplies from Iran.

"There's more concern on the Brent side that supply losses from Iran are harder to be made up," Flynn said.

India's Reliance Industries Ltd , owner of the world's biggest refining complex, plans to halt oil imports from Iran, two sources familiar with the matter said.

In Brazil, the FUP oil workers union said workers had joined the call for a nationwide strike on at least 20 oil rigs in the lucrative Campos basin and other areas of the country.

Protesters are calling for the resignation of Petroleo Brasileiro SA Chief Executive Officer Pedro Parente and a change to company fuel pricing policies. The company said production was not affected. Last week there was a strike by Brazilian truckers over high diesel prices. Ongoing unrest could threaten demand for fuels in Brazil, which U.S. data showed was the No. 8 energy consumer in 2016.

Industry group American Petroleum Institute (API) releases its weekly supply report at 4:30 p.m. EDT (2030 GMT) on Wednesday, followed by official government data on Thursday. U.S. inventories are expected to decline by 525,000 barrels.

(Additional reporting by Alex Lawler, Roslan Khasawneh and Rania El Gamal; Editing by David Gregorio and Edmund Blair)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)