LONDON: Oil prices gained nearly 2% on Tuesday, supported by OPEC-led production cuts which Saudi Arabia said it would surpass by over half a million barrels per day (bpd) and by US sanctions against Iran and Venezuela.
Brent crude futures were up $1.17 or 1.9% at $62.68 a barrel by 1135 GMT. US West Texas Intermediate (WTI) crude oil futures rose $0.89 or 1.7% to $53.30.
Markets are tightening because of voluntary production cuts, effective since January 1, led by the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, aimed at forestalling a global glut.
Saudi Arabia, the world's top oil exporter and de facto leader of OPEC, said it would reduce crude production to around 9.8 million bpd in March, over half a million bpd more than it originally pledged.
Oil prices slip as slow progress in trade talks counters OPEC cuts
Energy Minister Khalid al-Falih announced the move in an interview with the Financial Times published on Tuesday as the kingdom seeks to drive up oil prices to help fund an economic transformation plan.
OPEC's monthly oil market report for February was due later on Tuesday.
Also on the radar are hopes expressed by US and Chinese officials that a new round of talks, which began in Beijing on Monday, would bring them closer to easing their months-long trade war.
Beijing and Washington are trying to hammer out a deal before a March 1 deadline, without which US tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25% from 10%.
However, rising US oil production, fighting near Libya's main oilfield, sanctions on Venezuela and suspense over whether Washington will grant more waivers to import Iranian oil leave markets unsure about broader supply.
Oil edges up, but heads for weekly loss on economic slowdown worries
"We believe that oil is not pricing in supply-side risks lately as markets are currently focused on US-China trade talks," JP Morgan said in a weekly note.
Should US-China talks succeed, the US bank said oil markets would "switch attention from macro concerns impacting future demand growth to physical tightness and geopolitical risks impacting immediate supply". Any economic slowdown could cap oil markets.
Bank of America also warned of a "significant slowing" in global growth, adding that it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019 and $65 and $60 in 2020.