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LONDON, United Kingdom—Oil prices recovered further on Tuesday as a strike by Kuwaiti petroleum workers entered its third day, outweighing disappointment over the failure of weekend talks to freeze output.
Prices had plunged early Monday soon after news that Sunday’s long-awaited meeting of major producers in Doha had collapsed, fanning worries about a persistent global oversupply.
However, the losses were pared through the day on news that thousands of workers in the Kuwaiti oil sector had started industrial action over planned wage cuts.
Just before 1100 GMT on Tuesday, US benchmark West Texas Intermediate for delivery in May rose 62 cents to $40.40 per barrel.
European benchmark Brent crude for June delivery won 75 cents to $43.66.
Kuwait—the fourth largest producer in the OPEC exporters’ cartel—revealed on Tuesday that it had managed to restore some affected production at its state oil firm.
Kuwait Petroleum Corp’s spokesman Sheikh Talal Khaled Al-Sabah said output was now running at 1.5 million barrels per day—50 percent of normal output—against 1.1 million bpd when the strike first erupted on Sunday.
Sheikh Khaled said a crude gathering centre in the north of the emirate had been put back into production and that the company had plans to reopen three more.
He did not specify how they were being staffed but on Sunday the cabinet gave orders for KPC to recruit contractors from abroad to operate some of its facilities in defiance of the indefinite strike called by the Kuwait oil workers union over planned wage cuts.
Analysts said the strike might only have a temporary effect on the market.
“The strike is a potential positive. But at this stage, it appears that this (Kuwait strike) may be resolved pretty quickly and so the overall interruption would not be large,” CMC Markets analyst Michael McCartney told AFP from Sydney.
Oil prices had rebounded last week on hopes that major producers—including the biggest two, Russia and Saudi Arabia—would agree to freeze output at January levels.
But Saudi Arabia’s decision not to take part unless bitter rival Iran also joined in torpedoed any hopes of a deal. Iran had said it would not agree to any caps having just returned to the export market after years of Western nuclear-linked sanctions.
Analysts said the focus will now shift to a key OPEC meeting in June.
Meanwhile, Iran will not accept an oil output freeze because it would effectively mean a prolonging of sanctions, its oil minister declared Tuesday, insisting rival producers caused a supply-led price slide.
Tehran has been pumping more crude since sanctions were lifted on January 16 under its nuclear deal with major powers, aiming to regain market share lost in recent years but adding to a global glut.
OPEC cartel member Iran did not send a representative to Doha and Oil Minister Bijan Zanganeh’s comments underlined why Tehran sees no justification for changing its stance.
“Accepting a production freeze in practice amounts to a voluntary acceptance of sanctions by our country after years of effort to have them lifted,” state television quoted Zanganeh as saying.
“A freeze by Iran at January 2016 production levels would mean that sanctions are not lifted and Iran’s exports would be stabilised at the sanctions level.”
Sanctions were lifted in return for curbs on the Islamic republic’s nuclear programme, which saw the OPEC cartel-member return to world oil markets and increase exports to around two million barrels per day, up from just over one million bpd previously.
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