Oil prices have risen following a reaffirmation by OPEC+ members to maintain their current output levels. As of 0501 WAT on Monday, Brent crude futures increased by $1.01, or 1.62%, to $63.39 a barrel, while US West Texas Intermediate crude gained $1, or 1.71%, to $59.55. This surge comes after both contracts experienced their fourth consecutive monthly decline, the longest losing streak since 2023, due to expectations of higher global supply.
The Organization of the Petroleum Exporting Countries and its allies initially agreed to pause production increases in early November, amid concerns of a potential supply glut. On Sunday, OPEC+ reiterated the importance of adopting a cautious approach, allowing for flexibility to continue or reverse voluntary production adjustments. Market participants had widely anticipated this move.
Recent geopolitical developments have also contributed to uncertainty in the oil market. US President Donald Trump sparked concerns by stating that the airspace above and surrounding Venezuela should be considered closed, given the country’s significant oil production. Although Trump later spoke with Venezuelan President Nicolas Maduro, he did not provide further details or clarify his previous statement.
Additionally, the Caspian Pipeline Consortium, which handles over 1% of global oil, halted exports after a Ukrainian drone attack damaged a mooring at its Russian terminal on the Black Sea. This incident, combined with escalating tensions between the US and Venezuela, has increased supply risks, according to ING analysts. The analysts noted that supply risks have risen due to additional Ukrainian attacks on Russian energy infrastructure.
In Europe, the prospects of a Russia-Ukraine peace deal have become increasingly uncertain, reversing the bearish sentiment of the past two weeks. Ukraine’s military recently claimed to have hit a Russian oil refinery and a military aviation plant in the Rostov region. As the situation continues to unfold, oil prices are likely to remain volatile, with market participants closely monitoring geopolitical developments and their potential impact on global supply. The recent increase in oil prices highlights the ongoing sensitivity of the market to supply and demand fluctuations, as well as geopolitical tensions.