Oil prices tick up on OPEC studying output cut, Iran tensions

Oil prices inched up on Tuesday as tension around Iran's seizure of a South Korean vessel simmered and after it emerged that the OPEC+ group is studying a possible production cut in February, according to a document.

Brent crude futures for March rose 35 cents to $51.44 a barrel by 0947 GMT, while U.S. West Texas Intermediate crude for February was at $48.04 a barrel, up 42 cents.

Both contracts fell more than 1 per cent on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, failed to agree on changes to February's oil output.

Saudi Arabia argued against pumping more because of new lockdowns while Russia led calls for higher production, citing recovering demand.

According to an OPEC document dated Jan. 4, the group is studying a 500,000 barrel per day output cut for February, and three other scenarios which include stable production or an increase of 500,000 bpd.

OPEC+ are due to resume talks at 1430 GMT.

Tensions around OPEC member Iran seizure of a South Korean vessel continued, with Iran saying the Asian country owed it $7 billion.

For a Factbox on the importance of Gulf waters on oil shipping click.

Sending bearish signals, England went into a new lockdown on Monday as its COVID-19 cases surged.

"Near-term demand growth is stalling due to the resurgence of COVID-19 across North America, Europe and the Middle East and is likely set for deeper declines over the next several months," Fitch Solutions said, adding that Brent is expected to average $53 a barrel this year.