Oil Prices Increase as OPEC+ Seeks to Avoid Supply Glut
Oil prices increased on Monday after the Organisation of Petroleum Exporting Countries and allies’ members (OPEC+) moved to avoid creating a supply glut in the global commodity market.
The oil group decided to pause further production hikes for the next quarter, a step seen as an effort to prevent a potential supply glut as demand slows and tensions between Russia and Ukraine intensify.
Brent crude was trading at $65.21 per barrel, up around 1% from the previous close of $64.57. US benchmark West Texas Intermediate (WTI) also increased by 1.1% to $61.37, compared to $60.69 in the prior session.
The eight members of the OPEC+ group agreed to raise oil production by 137,000 barrels per day (bpd) in December, while pausing further increases from January to March 2026 due to seasonality, according to OPEC’s statement on Sunday.
The group, comprising Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, met virtually on Sunday to review global oil market conditions and the outlook.
The modest hike is part of a gradual rollback of the 1.65 million bpd voluntary cuts announced in April 2023 and comes amid “healthy market fundamentals” and low oil inventories.
Producers also reaffirmed their commitment to monitor market conditions and to keep flexibility to pause or reverse any changes, including the 2.2 million bpd voluntary reductions announced in November 2023. They previously approved a similar 137,000-bpd increase for November.
Analysts said the pause signals a pre-emptive attempt to keep the market balanced.
“This period is normally a period of lower demand, and delegates said the decision to pause from January reflects expectations of a seasonal slowdown,” Daniel Hynes, a senior commodity strategist at the Australia and New Zealand Banking Group, said in a note.
“We suspect they’re also aware that the market may struggle to take any additional barrels, particularly if disruptions to Russian supply end up being temporary,” Hynes added.
Meanwhile, the war between Russia and Ukraine re-escalated over the weekend, with both sides targeting each other’s energy infrastructure as winter nears, supporting prices amid supply concerns.
Moscow and Kyiv traded accusations Sunday over overnight airstrikes that killed at least two people in Ukraine’s southern Odesa region and damaged energy facilities on both sides.
Ukraine’s State Emergency Service said in a statement on Telegram that an overnight Russian drone attack caused a fire in a parking area filled with trucks, which was later extinguished.
In Zaporizhzhia, Governor Ivan Fedorov said nearly 58,000 people lost electricity following the attack.
Ukraine’s Air Force said its defenses downed 67 of 79 strike drones and two Iskander-M ballistic missiles launched by Russia overnight.
In Russia’s southern Krasnodar region, the local operational headquarters said on Telegram that an oil terminal and tanker in the port town of Tuapse were damaged after fragments from downed Ukrainian drones fell on the site.
“According to preliminary information, there are no injuries. Emergency services are working at the scene,” it said, adding that a nearby railway station building was also damaged. Zenith Bank Price Target Sets at N81 after Q3 Earnings
