Onome Amuge
Oil prices edged higher on Monday, clawing back some of last week’s losses, after OPEC and its allies agreed a smaller-than-expected production increase and traders weighed the risk of tighter U.S. sanctions on Russian crude.
Brent crude, the international benchmark, gained 48 cents, or 0.7 per cent, to $65.98 a barrel, while West Texas Intermediate, the U.S. marker, rose 39 cents, or 0.6 per cent, to $62.26. Both contracts had risen more than a dollar earlier in the session before paring gains.
The rebound followed a bruising week for crude, when prices lost more than 3 per cent amid weak U.S. employment data and signs of slowing demand. Futures fell a further 2 per cent on Friday after a lacklustre jobs report deepened concerns over energy consumption in the world’s largest economy.
OPEC+, the producers’ alliance led by Saudi Arabia and Russia, said on Sunday it would raise collective output by 137,000 barrels a day from October, a fraction of the increases agreed earlier in the summer. In August and September, the group lifted production by about 555,000 bpd, while July and June saw hikes of 411,000 bpd.
“The market had run ahead of itself in regard to this OPEC+ increase. Today we’re seeing a classic sell-the-rumour, buy-the-fact reaction,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Analysts said the relatively small increase was unlikely to shift fundamentals, given that several members have already been pumping above their quotas. In a sign of internal strains, the cartel published a compensation schedule on Monday requiring six members to cut between 190,000 bpd and 829,000 bpd each month through mid-2026 to make up for overproduction.
The announcement was followed by Saudi Arabia’s decision to reduce its official selling price for Arab Light crude to Asia, signalling Riyadh’s willingness to defend market share in a region where demand growth is cooling.
“Riyadh and its allies signalled a decisive pivot: defending market share now outweighs defending prices. By allowing supply back into a market moving toward surplus, OPEC+ is playing offence, not defence. Traders have been put on notice,” said Claudio Galimberti, chief economist at Rystad Energy.
The market was also buoyed by the prospect of fresh sanctions on Russia. U.S. president Donald Trump on Sunday said Washington was prepared to move to a second phase of measures against Moscow or its oil buyers, the clearest signal yet of a potential escalation in the economic campaign tied to the war in Ukraine.
Over the weekend Russia launched its largest air strike of the conflict, setting ablaze a government building in central Kyiv and killing at least four people, according to Ukrainian officials. Trump said European leaders would meet U.S. counterparts in the coming days to discuss further steps.
“Expectations of tighter supply from potential new U.S. sanctions on Russia are also lending support,” said Toshitaka Tazawa, analyst at Fujitomi Securities. Frederic Lasserre, head of research at trading house Gunvor, warned that restrictions targeting buyers of Russian oil could disrupt established crude flows.
Despite the near-term bounce, banks expect a looser market in the coming years. Goldman Sachs said in a weekend note it anticipated a slightly larger global surplus in 2026, as new supply from the Americas outpaces lower Russian output and stronger demand. The U.S. bank kept its forecast for Brent and WTI unchanged for 2025, and projected average prices of $56 and $52 a barrel respectively in 2026.
