SINGAPORE— Oil prices rose around 1.5% on Monday after OPEC+ announced a more modest production increase than expected, easing fears of a supply surge. However, analysts say that weak global demand could cap any near-term rally.
Brent crude futures rose 91 cents (1.4%) to $65.44 a barrel by 0315 GMT, while U.S. West Texas Intermediate (WTI) climbed 89 cents (1.5%) to $61.77. “The price jump has primarily been boosted by OPEC+’s decision for a lower-than-expected production hike next month,” said Tina Teng, independent market analyst. “The group intended to buffer the recent slump in oil markets.”
The Organization of the Petroleum Exporting Countries (OPEC), along with Russia and allied producers, said it would increase production in November by 137,000 barrels per day (bpd) — the same as in October — as it continues to balance market stability against falling prices and softening demand.
Before the meeting, Russia had pushed for a moderate increase of 137,000 bpd, while Saudi Arabia was reportedly in favor of a larger boost to recover lost market share.
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Analysts at ANZ Bank said the decision was likely “manageable” given the rising risk of supply disruptions amid tightening Western sanctions on Russia and Iran, as well as Ukraine’s attacks on Russian energy facilities, including the Kirishi refinery, one of Russia’s largest.
Meanwhile, the Group of Seven (G7) nations last week pledged to tighten sanctions on entities helping Moscow evade restrictions, seeking to choke off Russia’s oil revenues amid the ongoing war in Ukraine.
Still, experts warned that demand weakness remains a pressing issue. “Without any fresh bullish catalysts and with growing ambiguity on demand, oil prices are likely to stay capped despite OPEC+’s smaller-than-feared output hike,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. “The reality is the market is gradually shifting toward oversupply, with seasonal demand expected to taper off into winter,” she added.
Analysts also noted that the refinery maintenance season, beginning this month, will likely curb crude demand further. “As the shoulder season progresses, a ramp-up in refinery maintenance should create a significant surplus, spurring a selloff in oil,” BMI analysts wrote in a client note.