Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

HOUSTON, Aug 22 (Reuters) – Oil prices rebounded from session lows to trade roughly flat in a volatile session on Monday as markets weighed the Saudi warning Saudi Arabia that OPEC+ production could cut production against the possibility of a nuclear deal that could return Iranian oil to the market.

Brent futures for October settled at $96.48 a barrel, down 24 cents or 0.25%. It had fallen 4.5% earlier in the day, snapping a three-day winning streak.

U.S. West Texas Intermediate (WTI) crude for September delivery, which expired on Monday, fell 54 cents, or 0.6%, to $90.23. The most active October contract was down 4 cents, or 0.03%, at $90.41.

Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ has the commitment, flexibility and means to face challenges and provide guidance, including cutting production at any time and in different forms, state news agency SPA reported. Read more

Meanwhile, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could allow sanctioned Iranian oil to return to world markets. Read more

The US State Department has said a nuclear deal is closer now than it was two weeks ago.

Earlier in the session, fears that aggressive US interest rate hikes could lead to a global economic slowdown and lower demand for fuel had driven prices lower.

“Near-term fundamentals look more bearish until we see positive economic indications from the US or China, which seems unlikely,” said Dennis Kissler, senior vice president of trading at BOK Financial.

The U.S. Federal Reserve will raise rates by 50 basis points in September as inflation peaks and recession worries grow, economists said in a Reuters poll. Read more

Investors will pay close attention to comments from Fed Chairman Jerome Powell when he addresses an annual conference of global central banks in Jackson Hole, Wyoming on Friday.

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The price pressure has also raised concerns about slowing fuel demand in China, the world’s biggest oil importer, in part because of a power crisis in the southwest. Read more

Beijing lowered its benchmark lending rate on Monday as part of moves to revive an economy hampered by a property crisis and a resurgence in COVID-19 cases. Read more

The dollar index hit a five-week high on Monday. A stronger greenback is generally bearish because it makes it more expensive for buyers of other currencies in the dollar-denominated oil market.

High natural gas prices exacerbated by reduced supply from Russia are bolstering demand for oil, said Ole Hansen, head of commodities strategy at Saxo Bank.

Global supply remains relatively tight, with the operator of a pipeline supplying around 1% of the world’s oil via Russia saying it will again cut production due to damaged equipment. Read more

OPEC+ produced 2.892 million barrels per day (bpd) below its target in July, two producer group sources said, as sanctions on some members like Russia and weak investment from others have hampered its ability to increase production. Read more

Reporting by Noah Browning in London; Additional reporting by Yuka Obayashi; Editing by Marguerita Choy, Kirsten Donovan and Mark Porter

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