Oil Prices Rise After OPEC+ Output Delay

By Colleen Howe
BEIJING (Reuters) – Oil prices increased by over $1 in early trading on Monday following OPEC+’s announcement on Sunday to postpone a planned December output hike by a month due to soft demand and increased supply outside the group.

Brent futures rose by $1.18 per barrel (1.61%) to $74.28 a barrel by 0121 GMT. U.S. West Texas Intermediate (WTI) crude increased by $1.20 per barrel (1.73%) to $70.69.

OPEC+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, was scheduled to raise output by 180,000 barrels per day (bpd) from December. This delay means the group will extend their 2.2 million bpd cut for another month, after postponing the increase from October due to falling prices and weak demand.

According to ING analysts, "While the delay until January does not significantly alter fundamentals, it does potentially prompt the market to rethink OPEC+ strategies." This decision contrasts with some market expectations that OPEC+ would proceed with the planned output increase.

The analysts noted, "This delayed supply increase suggests a greater willingness from the group to support prices than many anticipate."

The group is set to gradually unwind the 2.2 million bpd cut over the upcoming months, while another 3.66 million bpd of production cuts will remain until the end of 2025.

Last week, Brent and WTI experienced weekly declines of about 4% and 3%, respectively, primarily due to record U.S. output impacting prices. However, both contracts saw a slight increase on Friday amidst reports that Iran could retaliate against Israel within days.

On Thursday, the U.S. news website Axios indicated that Israeli intelligence believed Iran was preparing to attack from Iraq soon, citing two unnamed Israeli sources.

This week, markets are focused on the U.S. presidential election on Tuesday, with polls showing Democratic Vice President Kamala Harris and Republican former President Donald Trump in a tight race.

Additionally, on Thursday, economists expect the U.S. Federal Reserve to reduce interest rates by 25 basis points.

In China, the Standing Committee of the National People's Congress is meeting from Nov. 4-8 and is anticipated to approve more stimulus to invigorate the slowing economy, though analysts believe most funds may be directed toward reducing local government debt.