Brent crude, the international benchmark, rose as much as 2.5 per cent to $46.68 a barrel while West Texas Intermediate, the US marker, gained as much as 2.9 per cent to $45.94.

Fires spreading across the Canadian province of Alberta have prompted oil companies to halt production, reducing the country’s daily output by about a fifth. Officials have warned that they could be fighting the blaze “for months”.

Last week, fires ravaged the country’s oil sands capital, Fort McMurray, compelling the evacuation of residents and forcing companies — including Royal Dutch Shell, Suncor Energy and Syncrude — to shut down operations in the world’s third-largest oil production hub.

Nomura estimates capacity has been reduced by 700,000-800,000 barrels of oil equivalent per day, but said that “the ultimate impact from the Alberta wildfires remains unclear. Moreover, weather continues to pose a significant concern as forecasts call for relatively high temperatures, low humidity and high winds”.

Concerns in recent days about reduced supply have buoyed oil prices, which have recovered by more than 60 per cent since January when they hit their lowest level since late 2003, beneath $30 a barrel.

According to IHS, a consultancy, discoveries of new oil reserves have dwindled to their lowest in more than 60 years. If the discovery rate does not pick up it will create a shortfall in global supplies of about 4.5m barrels per day by 2035, according to Wood Mackenzie.



Investors are also digesting Saturday’s decision by Saudi Arabia’s deputy crown prince to replace the monarchy’s veteran oil minister, Ali al-Naimi.

His removal had been anticipated, according to analysts, as part of a broader reshuffle of senior posts at the world’s largest oil exporter — though some said the timing of the move ahead of the June Opec meeting signalled the extent of divisions between Mr Naimi and the deputy crown prince.

His replacement, Khalid al-Falih, also a veteran of the state oil company Saudi Aramco, should provide some continuity in oil policy, but he is also seen as more in line with the overall reform agenda being pushed by Deputy Crown Prince Mohammed, which is to make Saudi Arabia less reliant on oil revenues.

The recovery in oil prices has been aided by expectations that major producers would agree to a deal to freeze output at January’s levels. However, the talks in Doha in April ended in a stalemate when Saudi Arabia said it would not curb production unless Iran, which is rebuilding exports after years of sanctions, was part of the deal.

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