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NEW YORK: Oil prices rose more than $3 a barrel on Monday, extending last week’s gain, as potential OPEC+ output cuts and conflict in Libya helped to offset a strong US dollar and a dire outlook for US growth.

Saudi Arabia, top producer in the Organization of the Petroleum Exporting Countries, last week raised the possibility of production cuts, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West.

OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on Sept. 5.

Brent crude was up $3.16, or 3.1 percent, at $104.15 a barrel by 12:22 p.m. EDT (1633 GMT), having risen by 4.4 percent last week. US West Texas Intermediate crude gained $3.16, or 3.4 percent, to$ 96.22 after rallying 2.5 percent last week.

“Oil prices are inching higher on hopes of a production cut from OPEC and its allies to restore market balance in response to the revival of Iran’s nuclear deal,” said Sugandha Sachdeva, vice president of commodity research at Religare Broking.

Nations that are members of the International Energy Agency could release more oil from strategic petroleum reserves if they find it necessary when the current scheme expires, the head of the agency said on Monday.

The price of crude oil has surged this year, with Brent coming close to a record high of $147 in March as Russia’s invasion of Ukraine exacerbated supply concerns. Rising fears over high interest rates, inflation and recession risks have since weighed on the market.

Strong US dollar

Oil’s gain was limited by a strong US dollar, which hit a 20-year high on Monday after the Federal Reserve chairman signaled that interest rates would be kept higher for longer to curb inflation.

“While a strong dollar restrains broad commodity prices, the undersupply issue in the oil markets will probably continue to support the upside bias,” said CMC Markets analyst Tina Teng.

Unrest in Libya’s capital at the weekend, resulting in 32 deaths, sparked concern that the country could slide into a full-blown conflict and disrupt in oil supply from the OPEC nation.

US crude oil stockpiles likely fell 600,000 barrels with distillates and gasoline inventories also seen down, a preliminary Reuters poll showed on Monday.