Latest News

Oil prices rise on modest OPEC+ production hike decision and Russia's supply problems

The oil prices rose on Tuesday as OPEC+ increased production less than the market expected, and concerns about tighter supplies due to new sanctions against Russia also continued to support them.

Brent crude rose 22 cents or 0.33% to $66.24 a bar by 0005 GMT. U.S. West Texas intermediate crude rose 24 cents or 0.39% to $62.50 a bar.

OPEC+ is a group of eight countries and their allies that have agreed to increase production by 137,000 barrels a day starting in October. This is a much smaller increase than the monthly gains of approximately 555,000 barrels per day for September and August and 411,000 barrels per day in July and Juni. This is less than what some analysts expected.

In a Tuesday client note, Daniel Hynes said that the October move was "a reversal" of the cuts which were to be in place until 2026. This follows the rapid return of barrels idled in recent months.

The speculation that more sanctions would be imposed on Russia following the largest air strike by Russia on Ukraine, which set a Kyiv government building on fire, also helped to support prices. Donald Trump, the U.S. president, said that he is ready to implement a second round of restrictions.

The top European Union sanctions official, along with a team experts from Washington, discussed what would be the very first coordinated transatlantic measure against Russia after Trump's return to office.

Additional sanctions against Russia could reduce its oil supplies to the global market, which would support higher oil prices.

Next week, the U.S. Federal Reserve’s Federal Open Market Committee will meet. Traders predict an 89.4% probability of a quarter point interest rate reduction.

Lower rates can reduce borrowing costs for consumers and boost the economy. (Reporting and editing by Christopher Cushing in Bengaluru, Anjana Anil)

(source: Reuters)