Oil prices jumped sharply on Monday after OPEC+ announced its decision to delay December’s planned production increase by one month. The market remains tense as it anticipates both the U.S. presidential election and a key meeting in China this week.
Brent crude futures rose by $1.39 per barrel, or 1.9%, reaching $74.49 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by $1.41, or 2.0%, to $70.90.
OPEC+, which comprises the Organization of Petroleum Exporting Countries, Russia, and other allies, announced on Sunday that it would extend its current production cut of 2.2 million barrels per day (bpd) through December. This decision postpones the production increase initially planned for October due to falling prices and weak demand.
According to ING analysts, while the delay until January doesn’t significantly alter the fundamentals, it may force the market to reconsider OPEC+’s strategy. They note that this postponement contradicted market expectations for OPEC+ to proceed with the planned increase, suggesting that “the group are more willing to support prices than many believe.”
Last week, both Brent and WTI recorded weekly declines of approximately 4% and 3% respectively, primarily due to record U.S. output. However, both contracts saw slight gains on Friday amid reports of potential Iranian retaliatory strikes against Israel.
The organization plans to gradually unwind the 2.2-million-bpd cut in the coming months, while maintaining another 3.66 million bpd of production cuts until the end of 2025.
Market tensions were further heightened by reports from U.S. news website Axios, citing Israeli intelligence sources, suggesting Iran might be preparing to attack Israel from Iraq within days.
