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Oil Prices Rally On OPEC Output Cut Talk

Oil prices climbed on Tuesday as attention shifted back to tight supply.

Benchmark Brent crude futures rallied 1.5 percent to $97.91 a barrel, while WTI crude futures were up 1.8 percent at $92 a barrel.

Supply concerns returned to the fore after Saudi Arabia warned that OPEC could cut output to correct the recent oil price fall.

Saudi Arabia's Oil Minister Prince Abdulaziz bin Salman said late Monday that the Organization of the Petroleum Exporting Countries stands ready to reduce production as future prices don't reflect the underlying fundamentals of supply and demand.

"The paper and physical markets have become increasingly more disconnected," he said in response to written questions from Bloomberg News.

"Witnessing this recent harmful volatility disturb the basic functions of the market and undermine the stability of oil markets will only strengthen our resolve," he said.

Meanwhile, a proposed deal to restore limits on Iran's nuclear activities is supported by most of the countries involved but the Americans are yet to give their verdict, the European Union's top diplomat said.

Josep Borrell said in an interview with Spanish broadcaster TVE that he expects a response from he United States during this week.

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