Oil prices climbed over $1 on Monday as OPEC+ announced a delay in its scheduled output hike, pushing the increase back by a month amid weak demand and falling prices. Brent crude rose $1.18, or 1.61%, to reach $74.28 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.21, or 1.74%, to $70.70 per barrel as of 0402 GMT.
On Sunday, OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia, and allies, extended its current output cut of 2.2 million barrels per day (bpd) through December. Originally set to increase production by 180,000 bpd, the group postponed the planned hike from October, citing price pressures and lackluster demand.
Analysts at ING noted that while the delay doesn’t significantly shift market fundamentals, it may prompt some to rethink OPEC+’s strategy. The postponed increase surprised some market participants, who had expected the hike to proceed as scheduled, and indicated that OPEC+ may be more inclined to sustain prices than previously thought.
The group plans to gradually ease the 2.2-million-bpd cut in coming months, while an additional cut of 3.66 million bpd will extend through the end of 2025. Last week, both Brent and WTI posted declines of around 4% and 3% respectively, affected by record-high U.S. oil output, though both rose slightly on Friday amid reports of potential Iranian retaliation against Israel.
U.S.-based news outlet Axios reported on Thursday that Israel’s intelligence suspected an imminent attack from Iran, potentially originating from Iraq.
Market strategist Yeap Jun Rong from IG suggested the price rally may be short-lived, with previous gains from delayed output hikes and geopolitical risks often proving temporary. He added that oil prices may remain within a consolidation range, with resistance expected around the $78.50 mark.
This week, investors are closely watching Tuesday’s U.S. presidential election, where polls show a tight race between Democratic Vice President Kamala Harris and Republican ex-President Donald Trump. On Thursday, analysts expect the Federal Reserve to reduce interest rates by 25 basis points. Meanwhile, China’s National People’s Congress Standing Committee meets this week, with anticipated stimulus measures that may focus on reducing local government debt.
