Oil prices extended gains on Tuesday following the decision by OPEC+ to increase output by less than market participants had anticipated, while concerns over tighter supply due to potential new sanctions on Russia continued to lend support.
Brent crude rose 51 cents, or 0.77 percent, to $66.53 a barrel by 0645 GMT, while US West Texas Intermediate crude climbed 50 cents, or 0.8 percent, to $62.76 a barrel.
Eight members of the Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, agreed on Sunday to raise production from October by 137,000 barrels per day. That is much lower than the monthly increases of about 555,000 bpd for September and August, and 411,000 bpd in July and June. It is also less than some analysts had expected.
The October move “marks the reversal of cuts that were set to remain in place until the end of 2026, following the rapid return of the previous tranche of idled barrels over recent months,” said Daniel Hynes, senior commodity strategist at ANZ, in a client note on Tuesday.
Overall, given faster OPEC+ output increases this year and demand once again undershooting early-year expectations, the looming crude market oversupply remains the core driver of prices this year, Haitong Securities said.
Prices were also supported by speculation of more sanctions on Russia after the country’s biggest air attack on Ukraine set fire to a government building in Kyiv. US President Donald Trump said he was ready to move to a second phase of restrictions.
The European Union’s top sanctions official was in Washington with a team of experts to discuss what would be the first coordinated transatlantic measures against Russia since Trump returned to office.
Further sanctions on Russia would diminish its oil supply to global markets, which could support higher oil prices.
The US Federal Reserve’s Federal Open Market Committee meets next week, and traders see an 89.4 percent chance of a quarter-point interest rate cut.
Lower rates reduce consumer borrowing costs and can boost economic growth and demand for oil.
