Oil prices rose by approximately 1.5% on Monday after OPEC+ announced a smaller-than-expected production increase for the month, easing some concerns about supply growth. Analysts expect short-term growth to be limited by weak demand. Reuters reports this, writes UNN.
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Brent crude futures rose 91 cents, or 1.4%, to $65.44 a barrel by 03:15 GMT (06:15 Kyiv time), while U.S. West Texas Intermediate crude was at $61.77, up 89 cents, or 1.5%.
"The sharp rise in prices was primarily driven by the OPEC+ decision for a lower-than-expected production increase next month, amid the group's intention to mitigate the recent downturn in oil markets," said independent analyst Tina Teng.
On Sunday, the Organization of the Petroleum Exporting Countries (OPEC+), which includes Russia and a number of major producers, announced a production increase of 137,000 barrels per day from November.
Ahead of the meeting, sources reported that Russia advocated for a production increase of 137,000 barrels per day to avoid price pressure, but Saudi Arabia would prefer to double, triple, or even quadruple this figure to regain its market share faster.
"The OPEC+ decision to increase production by another 137,000 barrels per day in November may be justified in light of growing supply disruptions due to increased U.S. and European sanctions against Russia and Iran," ANZ analysts noted in their Monday note.
"Meanwhile, Ukraine continued to intensify attacks on Russian energy facilities, including the Kirishi refinery, one of the largest in Russia, with an annual processing capacity of over 20 million tons," analysts added.
Finance ministers of the Group of Seven last week said they would take steps to increase pressure on Russia, targeting those who continue to increase purchases of Russian oil and facilitate sanctions evasion, as part of efforts to reduce Russian revenues in connection with Moscow's invasion of Ukraine.
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However, analysts expect weak demand fundamentals in the fourth quarter to curb price growth in the short term.
"In the absence of new growth catalysts and growing uncertainty about the demand outlook, oil prices are likely to remain constrained despite the smaller-than-expected OPEC+ production increase," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
"The reality is that the market is gradually moving into an oversupply phase, with seasonal demand expected to decline before winter, and macroeconomic data not signaling significant growth," she added.
The global refinery maintenance season, which largely begins this month, is likely to put pressure on demand.
"As the inter-season approaches... increased refinery maintenance volumes should lead to a significant oversupply, triggering an oil sell-off," BMI analysts noted in a client note.
Russia's oil revenues fell by a fifth - Bloomberg03.10.25, 16:57 • [views_4457]