Oil prices went up by 1% in early Asian trade after the United Arab Emirates' energy minister said the nation is producing near capacity, countering expectations that it could boost supply in a tight market.
The UAE and Saudi Arabia are the only two countries in the Organization of the Petroleum Exporting Countries OPEC with spare capacity to make up for lost Russian supply and weak output from other member nations.
The US West Texas Intermediate WTI crude CLc 1 futures climbed $1.07, or 1%, to $110.64 a barrel at 0028 GMT, extending a 1.8% gain in the previous session.
The price of crude LCOc 1 futures went up by $1.08, or 0.9%, to $116.17 a barrel, adding to a 1.7% rise in the previous session.
In a note, Commonwealth Bank commodities analyst Tobin Gorey said that the two major producers, Saudi Arabia and the UAE, are said to be at or very close to near term capacity limits.
UAE Energy Minister Suhail al-Mazrouei said on Monday that the UAE was producing near maximum capacity based on its quota of 3.168 million barrels per day bpd and Saudi Arabia could increase output by only 150,000 barrels per day, which is less than its nameplate spare capacity of around 2 million barrels per day, according to French President Joe Biden, who told the Group of Seven nations on the sidelines of the Group of Seven nations meeting.
Political unrest in Libya and Ecuador could tighten supply further, according to analysts.
Libya's National Oil Corp said on Monday it might have to declare force majeure in the Gulf of Sirte area within the next three days unless production and shipping resume at oil terminals there.
Ecuador's Energy Ministry said the country could suspend oil output completely within the next two days due to anti-government protests. The former OPEC country was pumping around 520,000 barrels per day before the protests.
The market rebounded this week due to shortages in the market, which has led to the market's rebound this week, countering recession jitters that have weighed on prices over the past two weeks.
More barrels must come to markets for oil prices to move meaningfully and steadily down, SPI Asset Management managing partner Stephen Innes said in a note.