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Oil prices rise, set for third weekly gain

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Oil prices climbed in Asia on Friday, heading for their third weekly gain after Opec said it was open to fresh talks on freezing output despite the failure to reach a deal at the weekend.

[SINGAPORE] Oil prices climbed in Asia on Friday, heading for their third weekly gain after Opec said it was open to fresh talks on freezing output despite the failure to reach a deal at the weekend.

The exporting group's Secretary-General Abdalla El-Badri said it could revive the discussion among members and hold further talks with non-members. Opec holds its next twice-yearly meeting on June 2.

A much-vaunted gathering Sunday in Doha collapsed after kingpin Saudi Arabia pulled out blaming bitter rival Iran's refusal to join in output limits. Tehran said it was still in the process of raising production after the removal of nuclear-linked Western sanctions in January.

However, while crude prices plunged immediately after the meeting fell apart, it has surged this week thanks to falling US production, a strike in key producer Kuwait and signs of a pick-up in key market China.

US benchmark West Texas Intermediate (WTI) for delivery in June was up 45 cents, or 1.04 per cent, at US$43.63 and Brent crude for June climbed 39 cents, or 0.88 per cent, to US$44.92.

WTI is up more than eight per cent and Brent 4.2 per cent from last Friday's close.

"The market is reacting to hopes that there will be more talks to discuss freezing output measures to support oil prices," Bernard Aw, an analyst with IG Markets Singapore, told AFP.

"But in my view, the failure of the previous talks in Doha has damaged Opec's credibility," Aw said, adding he was not hopeful of an agreement in June.

And BMI Research warned in a note that the long-running enmity between Iran and Saudi Arabia - who are fighting proxy wars in the Middle East - could prevent any deal being made.

"We believe that Saudi Arabia and Iran's disagreement over oil is a symptom of wider geopolitical tensions between the two, and therefore do not expect a political Opec agreement to be reached during the June 2 meeting," it said.

"The feud between Riyadh and Tehran runs deep, as both compete for regional political and religious hegemony."

AFP