TOKYO: Oil rose on Wednesday, with Brent above $40 for the first time since March, as optimism mounted that major producers will extend output cuts and a recovery from the coronavirus pandemic will spur fuel demand.
Brent crude futures for August were up 78 cents, or 2 percent, at $40.35 a barrel, by 0636 GMT. The contract climbed to as high as $40.53, the highest since March 6, after gaining 3.3 percent on Tuesday.
US West Texas Intermediate (WTI) crude futures gained $1.06, or 2.9 percent, at $37.87 a barrel. It rose to as much as $38.18, also the highest since March 6. The contract ended the previous session up 3.9 percent.
Both benchmarks have risen sharply in recent weeks from the lows of April, buoyed by a continuing recovery in China, the red zone of the virus outbreak, while other economies are slowly opening up after lockdowns to contain its spread.
The Organization of the Petroleum Exporting Countries (OPEC) and other major producers including Russia, a group known as OPEC+, may extend production cuts of 9.7 million barrels per day (bpd), or about 10 percent of global output, into July or August, sources said.
The cuts are currently due to run through June, scaling back to a reduction of 7.7 million bpd from July to December, but Saudi Arabia has been pushing to keep the deeper cuts in place for longer.
“Traders are expecting major crude producers to agree on an extension of their huge output cuts to shore up prices,” said Avtar Sandu, senior manager, commodities at Phillip Futures.
With the date of the meeting not yet set and some calling for it to be early as this week, much remains up in the air, however.
But the demand picture is looking brighter as economies including China, the world’s second-biggest oil consumer, start to recover from the pandemic. China’s services sector returned to growth for the first time since January, a private survey showed on Wednesday.
“As virus-related lockdown measures continue to be lifted, we expect that demand will gradually recover,” Capital Economics said in a note, estimating that global oil consumption will fall to just under 92 million bpd on average in 2020.
This compared with 100.2 million bpd in 2019, it said, before the pandemic swept through Europe and the United States, evaporating demand for everything from flying to trips to the dentist.
Traders were also monitoring Tropical Storm Cristobal in the Gulf of Mexico for its potential to disrupt oil and gas facilities.
US crude oil inventories fell by 483,000 barrels in the week to May 29, the American Petroleum Institute said on Tuesday. Gasoline and distillate fuel stockpiles rose.
Official government inventory data will be released later on Wednesday. Those figures show US stockpiles still remain high and are forecast to have risen for a second week in a row.
Oil gains, with Brent above $40, as hopes rise for output cuts, recovery
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Oil gains, with Brent above $40, as hopes rise for output cuts, recovery
- Both benchmarks have risen sharply in recent weeks from the lows of April
- Prices buoyed by a continuing recovery in China
Kuwait to boost Islamic finance with sukuk regulation
- The move supports sustainable financing and is part of Kuwait’s efforts to diversify its oil-dependent economy
RIYADH: Kuwait is planning to introduce legislation to regulate the issuance of sukuk, or Islamic bonds, both domestically and internationally, as part of efforts to support more sustainable financing for the oil-rich Gulf nation, Prime Minister Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah said on Wednesday.
Speaking at the World Governments Summit in Dubai, Al-Sabah highlighted that Kuwait is exploring a variety of debt instruments to diversify its economy. The country has been implementing fiscal reforms aimed at stimulating growth and controlling its budget deficit amid persistently low oil prices. Hydrocarbons continue to dominate Kuwait’s revenue stream, accounting for nearly 90 percent of government income in 2024.
The Gulf Cooperation Council’s debt capital market is projected to exceed $1.25 trillion by 2026, driven by project funding and government initiatives, representing a 13.6 percent expansion, according to Fitch Ratings.
The region is expected to remain one of the largest sources of US dollar-denominated debt and sukuk issuance among emerging markets. Fitch also noted that cross-sector economic diversification, refinancing needs, and deficit funding are key factors behind this growth.
“We are about to approve the first legislation regulating issuance of government sukuk locally and internationally, in accordance with Islamic laws,” Al-Sabah said.
“This enables us to deal with financial challenges flexibly and responsibly, and to plan for medium and long-term finances.”
Kuwait returned to global debt markets last year with strong results, raising $11.25 billion through a three-part bond sale — the country’s first US dollar issuance since 2017 — drawing substantial investor demand. In March, a new public debt law raised the borrowing ceiling to 30 billion dinars ($98 billion) from 10 billion dinars, enabling longer-term borrowing.
The Gulf’s debt capital markets, which totaled $1.1 trillion at the end of the third quarter of 2025, have evolved from primarily sovereign funding tools into increasingly sophisticated instruments serving governments, banks, and corporates alike. As diversification efforts accelerate and refinancing cycles intensify, regional issuers have become regular participants in global debt markets, reinforcing the GCC’s role in emerging-market capital flows.
In 2025, GCC countries accounted for 35 percent of all emerging-market US dollar debt issuance, excluding China, with growth in US dollar sukuk issuance notably outpacing conventional bonds. The region’s total outstanding debt capital markets grew more than 14 percent year on year, reaching $1.1 trillion.
