Mubasher: Oil prices jumped on Tuesday amid supply curbs led by the Organization of Petroleum Exporting Countries (OPEC) and Russia.

However, an increasingly gloomy economic outlook may soon drag growth in fuel demand.

By 8:19 am GMT, global benchmark Brent futures rose 0.71% to $59.41 per barrel (pb), while US Nymex crude futures climbed 0.97% to $51 pb.

An OPEC-led producer group, including Russia, agreed late last year on withholding crude output to rein in an oversupply in global market.

In the US, drillers reduced the number of oil rigs to 873 earlier this year, from a 2018-high of 888, pointing to a potential dent in production growth which was at over 2 million barrels per day (bpd) last year.

“OPEC-led cuts and declining US rig counts have bolstered market sentiment in the New Year,” Singapore-based brokerage Phillip Futures told Thomson Reuters.

Moreover, the US re-instated sanctions against Iran’s hydrocarbon sector last November.

Although Washington granted waivers to Iran’s largest crude importers, the oil-rich nation’s shipments have plunged since.

Iran’s exports have already tumbled and probably would remain at 1.3 million bpd this year, 1.3 million bpd lower than their average in the first half of last year, HSBC said in its oil market outlook for this year.

However, an economic downturn is looming over oil and financial markets.

Rising oil prices on Tuesday came after they fell by more than 2% in the previous session, dragged down by soft Chinese trade data, a sign of a global economic slowdown.

China’s National Development and Reform Commission (NDRC) on Tuesday signalled it may roll out further fiscal stimulus measures to curb a further economic slowdown.

“The outlook for the global economy continues to be highly uncertain,” HSBC noted, slashing its average 2019 Brent crude price forecast to $64 pb due to a surge in US production and an “increasingly uncertain demand backdrop.”