Oil prices extend gains as OPEC+ eyes production cuts if a revived Iran nuclear deal adds crude supplies to the market

• Crude oil prices added to gains on Tuesday as OPEC+ reportedly contemplates output cuts.
• Sources told Reuters that reductions could coincide with a return of Iranian oil supplies if its nuclear deal is revived.

Oil prices added to gains on Tuesday as OPEC+ officials told Reuters that production could be cut if Iranian supplies return to the market under a revived nuclear deal.

West Texas Intermediate crude climbed 3% to $93.02 on the news, while international benchmark Brent gained 2.91% to $99.20.

The initial nuclear deal reached during the Obama administration lifted sanctions on Iranian oil in return for a freeze on Tehran's nuclear program. President Trump pulled the US out of the agreement, but efforts to revive it ramped up after Joe Biden became president.

Talks have shown some progress lately, and on Monday Iran dropped some of its main conditions, including a demand that international nuclear inspectors close some of their investigations, according to Reuters.

Iran could potentially start selling oil in its reserves if sanctions are lifted, but the country would need roughly a year and a half to reach its full output capacity of 4 million barrels per day. Analysts have estimated that a return of Iranian oil would result in a near-term boost of about 1 million barrels a day to the global market.

Oil prices rallied earlier after Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg on Monday that a fundamental disconnect in the crude futures market could lead to the organization cutting output.

Any trim in OPEC+ oil production would mark a reversal from its effort to return output to pre-pandemic levels. In the immediate onset of COVID-19 lockdowns in 2020, OPEC and its non-member partners agreed to slash oil production as demand collapsed. But demand soon rebounded, and OPEC+ has been gradually bringing production back up for the last two years.