Oil rises as supply concerns offset planned output hike
Brent crude jumped 80 cents, or 1.2%, to $66.30 a barrel
Oil prices gained more than 1% on Monday, trimming some of last week’s losses, as the prospect of more sanctions on Russian crude after an overnight strike on Ukraine offset OPEC+’s planned output increase.
Brent crude jumped 80 cents, or 1.2%, to $66.30 a barrel by 0345 GMT.
The benchmark dropped more than 2% on Friday as a weak U.S. jobs report dimmed the outlook for energy demand. They lost more than 3% last week.
OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and allies, agreed on Sunday to further raise oil production from October as Saudi Arabia pushes to regain market share, while slowing the pace of increases compared with previous months.
OPEC+ has been increasing production since April after years of cuts to support the oil market, but the latest decision came as a surprise amid a likely looming oil glut in the northern hemisphere winter months.
Eight members of OPEC+ will lift production from October by 137,000 barrels per day, far below the monthly increases of about 555,000 bpd for September and August and 411,000 bpd in July and June.
Buying emerged as the output increase was smaller than anticipated, while fading prospects for peace in the Russia-Ukraine war and views that Russian oil won’t flood the market also supported prices, said Satoru Yoshida, a commodity analyst with Rakuten Securities.
The oil market was supported by relief over OPEC+’s modest output hike and a technical bounce following last week’s decline, said Toshitaka Tazawa, an analyst at Fujitomi Securities, adding the OPEC+ output hike had been priced in since last week.
Expectations of tighter supply from potential new U.S. sanctions on Russia are also lending support, he said.
In a note over the weekend, Goldman Sachs said it expects a slightly larger oil surplus in 2026 as supply upgrades in the Americas outweigh a downgrade to Russia supply and stronger global demand.