Oil prices rose by as much as 2 per cent on Monday as Opec+ increase production at a much slower rate and concerns over the possibility of more sanctions on Russia stoked supply concerns.
Brent, the benchmark for two thirds of the world's oil, climbed by 1.98 per cent at 4.59pm UAE time to $66.8 a barrel, while West Texas Intermediate, the gauge that tracks US crude, was trading 1.96 per cent higher at $63.08 a barrel.
“The eight Opec+ countries that have been providing additional voluntary production restraint agreed to increase output in October by 137,000 barrels per day, a notable slowdown from the monthly increases of around 400,000-550,000 bpd they have implemented since May this year,” Edward Bell, acting group head of research and chief economist at Emirates NBD, said.
“The stance from Opec+ from here may be to continue to test the market with higher output, even amid market consensus that a sizeable inventory build is due by end of the year and into 2026.”
Members of the Opec+ group of oil producers led by Saudi Arabia and Russia have been increasing production since April this year as the group shifts focus on regaining market share. Opec+ agreed in August to increase oil production by 547,000 bpd for September, following a larger-than-expected increase of 548,000 bpd rise in August and 411,000 bpd in May, June and July.
The possibility of more sanctions on Russia is also supporting oil prices.
US President Donald Trump threatened on Sunday to impose more sanctions on Russia, after the Kremlin unleashed its biggest-ever aerial barrage at Ukraine, according to media report.
Russian missiles and drones rained down across Ukraine early on Sunday, killing four people and setting government offices in the capital Kyiv ablaze.
Mr Trump told reporters after the assault he was “not happy with the whole situation” and said he was prepared to move forward on new sanctions on Moscow.
Oil markets remained volatile this year amid Mr Trump’s tariff plans and the Iran-Israel conflict.
Oil prices started the year strongly. The closing price of Brent peaked at more than $82 a barrel on January 15, while West Texas Intermediate hit almost $79 per barrel on that day.
However, demand concerns, a slowing global economy and less-than-stellar growth in China, the world's largest crude importer, have dampened crude prices this year.
“Our expectation for oil market balances has long been built on higher production from Opec+ countries, leading to an increase in global inventories and weighing on prices for the balance of 2025 and into 2026,” Mr Bell said.
“Our forecast of Brent at an average of $65 per barrel for the remainder of 2025 is unchanged following the October target levels and we expect prices will continue to hold close to $65 per barrel next year.”
