Oil rose after OPEC+ decided to increase production by less than market participants expected
Oil prices rose on Tuesday after OPEC+ decided to increase production by less than market participants expected. Concerns about supply shortages due to potential new sanctions against Russia continued to support this trend.
Brent crude rose 35 cents, or 0.53%, to $66.37 per barrel by 03:35 GMT, while WTI crude rose 32 cents, or 0.51%, to $62.58 per barrel.
OPEC+ agreed on Sunday to increase production by 137,000 bpd starting in October. This was significantly lower than the approximately 555,000 bpd increases in September and August and the 411,000 bpd in July and June. Even analysts hadn't expected this much.
The October move reversed the cuts, which were originally planned to remain in effect until the end of 2026.
Overall, given that OPEC+'s production increases are expected to be faster this year and demand is once again below year-end expectations, the looming crude oil market oversupply is expected to remain the primary driver of prices this year.
Prices were also supported by expectations of further sanctions against Russia after Russia's largest airstrike on Ukraine set fire to a government building in Kyiv. Trump said he was ready to move to the second phase of restrictions.
The European Union's top sanctions official was in Washington with his team of experts. Further sanctions against Russia would reduce oil supply to global markets, potentially sending oil prices higher.
The Federal Open Market Committee of the US Federal Reserve meets next week, and investors predict an 89.4% probability of a quarter-point interest rate cut.
Low interest rates lower consumer borrowing costs and can boost economic growth and oil demand.
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