Oil prices surged on Monday, with Brent futures rising by $1.18, or 1.61%, to $74.28 per barrel, and U.S. West Texas Intermediate crude increasing by $1.21, or 1.74%, to $70.70 per barrel.
This uptick followed OPEC+’s decision to postpone plans to increase output by a month, extending an output cut of 2.2 million barrels per day into December, according to Reuters.
This move comes amid concerns about falling prices and weak demand, as the market prepares for a significant week featuring a U.S. presidential election and a key meeting in China.
OPEC+ had initially planned to increase output by 180,000 barrels per day starting in December.
“While the delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” ING analysts said.
The delay bucked the expectations of some in the market for OPEC+ to deliver the planned hike in output, they added.
“This delayed supply increase means that maybe the group are more willing to support prices than many believe,” they said.
The group plans to gradually unwind the 2.2-million-barrel-per-day output cut over the coming months, while an additional 3.66 million barrels per day in production cuts will remain in effect until the end of 2025.
Last week, Brent and WTI crude oil prices saw declines of approximately 4% and 3%, respectively, primarily due to record U.S. output exerting downward pressure on prices.
However, both contracts rebounded slightly on Friday amid reports of a potential retaliatory strike by Iran on Israel.
According to a Thursday report from Axios, Israeli intelligence indicated that Iran was preparing to launch an attack from Iraq within days, based on information from two unidentified Israeli sources.
A market strategist at IG, Yeap Jun Rong, expressed uncertainty about the sustainability of the recent price uptrend, noting that previous positive reactions to delayed output hikes and geopolitical tensions often diminished over time.
He suggested that oil prices may remain within a broad consolidation range, with potential resistance around the $78.50 mark for any upward movement.
