Oil prices rose as the risk of sanctions against Russia offset OPEC+'s modest production increase
Oil prices rose more than 1% on Monday, recouping some of last week's losses. The possibility of further sanctions on Russian crude following the largest overnight airstrike of the war in Ukraine offset OPEC+'s planned production increase.
Brent crude rose 80 cents, or 1.2%, to $66.30 a barrel by 03:45 GMT, while WTI crude rose 75 cents, or 1.2%, to $62.62 a barrel.
Both indices fell more than 2% on Friday as a weak US jobs report dampened the energy demand outlook. They had lost more than 3% over the past week.
On Sunday, OPEC+, striving to regain market share, agreed to further increase oil production starting in October. The pace of production growth will be slow compared to the previous months.
The eight OPEC+ members will increase production by 137,000 bpd starting in October. This is well below the monthly increases of approximately 555,000 bpd in September and August and 411,000 bpd in July and June.
OPEC+ has been increasing production since April after years of cuts to support the oil market. However, the latest decision came as a surprise, given the expectation of a potential oil glut during the northern hemisphere's winter months.
The lower-than-expected production increase triggered buying, while waning hopes for peace in the Russia-Ukraine war and concerns about the shortage of Russian oil also supported prices.
US President Donald Trump announced on Sunday that some European leaders would visit the United States on Monday and Tuesday to discuss a resolution to the Russia-Ukraine war. Trump reiterated his confidence that the war will end soon.
The oil market has been supported by the relief provided by the modest OPEC+ production increase and the technical recovery following last week's decline, with the OPEC+ production increase factored in since last week.
Expectations of supply tightening stemming from potential new US sanctions on Russia also support this expectation.
Regarding the forecast, a slightly larger oil surplus is expected in 2026, as increased supply in the Americas outweighs the decline in Russian supply and strengthening global demand. Risks to prices in 2025-2026 are twofold, but slightly upward. The 2026 average is projected at $56/52 per barrel.
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