Vicky Price: 'Gone are days Scotland benefitted from oil prices'

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The price of oil tumbled on Wednesday following the near four percent jump from the previous day. The prices surged after Saudi Arabia suggested that immediate OPEC+ action to cut output should be taken.

According to the Saudi Energy Minister, the output cut would mean that oil prices could be supported in the event of the return of Iranian crude in the light of the possibility of a drop in US inventories.

Brent crude futures rose by 3.9 percent on Tuesday and by Wednesday the global benchmark saw it fall by 0.2 percent to $100.01 (£84.00).

On Wednesday the US West Texas Intermediate crude futures was down by 0.1 percent or 10 cents at $93.64 (£78.79).

However, on Tuesday, the prices had jumped by 3.7 percent due to the comments from the Saudi Arabian OPEC leader.

He noted that OPEC+ action to introduce cuts would balance the market which he said was “schizophrenic” as markets on paper and physical ones become less connected.

However, it now seems that the threat may not be so immediate as it was made out to be.

It is thought that OPEC+ action to cut output will likely overlap with Iran’s return to the oil markets.

Iran is thought to re-join the oil markets upon making a nuclear deal with the West, according to nine OPEC sources on Tuesday.

A US official said on Monday that Iran had relinquished some of its key demands over the resurrection of a deal.

Kazuhiko Saito, the chief analyst at Fujitomi Securities said: “Tuesday’s rally was overdone as many investors knew it would take several months for Iranian oil to flow into the international market even if an agreement to revise Tehran’s 2015 nuclear deal was made, meaning OPEC+ would trim output so quickly.”

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He added: “Still, there is not much room for the market’s downside due to robust heating fuel demand for winter.

US gas prices rose above $10 for the first time in approximately 14 years due to a rise in prices in Europe, where tight supplies continue.

On the week concluding August 19, UK crude stockpiles fell by 5.6 million barrels due to American Petroleum Institute figures against a drop by 900,000 barrels in a Reuters poll.

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