Oil prices saw a significant increase on Monday as OPEC+ announced it would delay its planned output hike by another month, spurring Brent crude to rise by $1.18, or 1.61%, reaching $74.28 per barrel by early morning GMT. Similarly, U.S. West Texas Intermediate (WTI) crude increased by $1.21 per barrel, or 1.74%, reaching $70.70. This decision follows OPEC+’s earlier postponement of an October output hike to December, amid lower prices and sluggish demand. With this latest delay, the group, which includes the Organization of the Petroleum Exporting Countries, Russia, and other allies, continues a 2.2-million-barrel-per-day (bpd) production cut until the end of the year.
Analysts from ING suggest that while the delay does not drastically shift the fundamental market conditions, it signals that OPEC+ may be more supportive of maintaining stable prices than some market participants had expected. The group’s original plan was to increase production by 180,000 bpd from December, which has now been postponed to January, indicating a cautious approach in light of volatile demand and a fluctuating market.
Geopolitical Tensions and Production Cuts Influence Oil Market Dynamics
The recent price hike comes as both Brent and WTI crude faced notable weekly declines of around 4% and 3%, respectively, with U.S. crude output at record levels affecting overall prices. Nonetheless, oil prices managed to inch upwards on Friday due to geopolitical concerns, as reports surfaced about potential Iranian attacks on Israel, leading to increased caution among investors. According to sources cited by U.S. news site Axios, Israeli intelligence suggested Iran was considering launching an attack on Israel from Iraq, adding another layer of complexity to the already tense global landscape.
While short-term increases in prices are influenced by such geopolitical risks, market analysts like Yeap Jun Rong from IG remain uncertain about the sustainability of this upward trend. Rong noted that previous reactions to both delayed output hikes and international tensions have often been short-lived. Moving forward, oil prices may stay within a consolidation range, with resistance expected around $78.50 per barrel.
Key Economic Events Ahead: U.S. Presidential Election and China’s Stimulus Decisions
This week brings further market-shaping events, notably the upcoming U.S. presidential election and economic policy decisions from China. Polls reveal a tight race between Democratic Vice President Kamala Harris and Republican former President Donald Trump, adding political uncertainty to an already cautious oil market. Economists also anticipate that the U.S. Federal Reserve could announce a 25-basis-point interest rate cut on Thursday, a move that may impact the dollar and, consequently, oil prices.
In China, the National People’s Congress Standing Committee will convene from Monday to Friday, with expectations that it will approve additional economic stimulus measures. Analysts predict that these efforts will focus largely on alleviating local government debt, though some funds may also target broader economic revitalization as China grapples with its slowing economy. Together, these events contribute to a market atmosphere marked by anticipation and volatility, as investors navigate shifting oil supplies, political developments, and global economic policy changes.
