Oil prices jumped on Monday with the Brent benchmark hitting its highest in more than two years.
Rising demand and geopolitical worries fuelled the increase, along with indications that production cuts by Opec members are starting to bite.
Brent rose 3.8% to $59.02 a barrel, its highest since July 2015, while the US West Texas benchmark rose 3% to $52.22.
“The production cut is starting to work and the rebalance is underway,” said Gene McGillian, at Tradition Energy.
The oil market has been in a downturn for almost three years. But the head of BP’s oil trading division in Asia, Janet Kong, told a Financial Times conference the market was now “at a juncture”.
As well as increased demand, especially from China, Turkey’s threat to disrupt oil flows from Iraq’s Kurdistan region, helped push up prices on Monday.
Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.
“If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” analysts at Commerzbank said in a research note.
Meanwhile, Opec, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil prices by about 15% in the past three months.
At an Opec meeting on Friday, several countries said output curbs were having the desired impact on the market and price.
Kuwaiti Oil Minister Essam al-Marzouq said the cuts had reduced global crude stocks to their five-year average, Opec’s target.