Brent, the benchmark for two thirds of the world’s oil, was trading 1.40 per cent higher at $86.08 a barrel at 12.46pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 1.50 per cent at $81.72 a barrel.
Saudi Arabia, the world’s largest oil exporter, will continue with its voluntary cut of one million bpd, which went into effect in July 2023 and was later extended until the end of December, the state-run Saudi Press Agency said on Sunday, citing an official source from the kingdom’s Energy Ministry.
“Thus, the kingdom’s production in the month of December 2023 will be approximately nine million bpd,” the source said.
“This voluntary cut decision will be reviewed next month to consider extending the cut, deepening the cut or increasing production.”
Meanwhile, Russia will keep in place export cuts of 300,000 bpd, which came into effect in September and October, until the end of the year.
Russian Deputy Prime Minister Alexander Novak said a market analysis would be done next month to decide whether to continue with the production cuts or raise output, state-run Tass news agency said.
The Opec+ alliance has total production cuts in place of 3.66 million bpd, including a two million bpd reduction agreed upon last year and voluntary cuts of 1.66 million bpd announced in April.
Brent has given up most of its gains since October 7 when Palestinian militant group Hamas, which rules the Gaza Strip, launched a surprise attack on southern Israel, killing about 1,400 people and taking about 240 hostages.
Israel has since responded with a heavy bombardment of the Palestinian enclave, with the death toll at about 9,500.
"Oil prices came off last week as fears around the conflict in Gaza turning into a wider regional confrontation eased, meaning that prices lost the risk premium that had driven them higher over recent weeks, while concerns around demand came to the fore once again," said Daniel Richards, senior economist at Emirates NBD.
On Friday, the US passed a bill to bolster sanctions on Iranian oil in response to the country's alleged involvement in the Hamas attack.
Tehran, a main backer of Hamas and Lebanon's Hezbollah, has denied any involvement.
The bill is expected to impose measures on foreign ports and refineries that process petroleum exported from Iran in breach of American sanctions.
Tehran has been ramping up production in recent months despite US sanctions.
Last week, Iran's Oil Minister Javad Owji said the country's production had reached 3.4 million bpd, up from 2.55 million bpd in 2022, the semi-official Fars news agency reported.
Iran’s oil exports have faced restrictions since 2018 after the US withdrew from a nuclear agreement reached in 2015. The subsequent reinstatement of sanctions on the country has rattled its economy.
"Normally, you would’ve expected the dovish Fed expectations, the lower dollar and a global risk rally to boost sentiment in oil," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"The morose economic outlook and weak manufacturing data across the globe will likely limit gains before we get close to that well-wished $100 per barrel level," she said.