OPEC+ agreed to resume oil production increases at a slightly accelerated pace, even as conflict sparked by U.S.–Israeli strikes on Iran heightens risks to global crude flows.
Friday’s gain in crude oil prices was small enough that it could almost be described as neutral for the day, largely due to an overall slowdown in U.S. inflation.
OPEC and its allies (OPEC+) agreed on Sunday, Feb. 1, to keep oil production levels unchanged for March, reaffirming earlier decisions amid heightened geopolitical uncertainty and firmer crude prices.
The OPEC+ group is expected to maintain its oil production policy unchanged this weekend and affirm a pause in output hikes in March even as Brent Crude prices hit $70 per barrel this week for the first time in five months, delegates from the alliance told Reuters on Friday.
Nigeria’s crude oil production slipped in December from November as Africa’s top producer continues to struggle to pump to its full OPEC+ output quota amid operational challenges in its upstream sector.
In the report, the Standard Chartered Bank analysts said rolling back the November 2023 tranche of voluntary cuts has improved market transparency and allowed traders to obtain a more realistic picture of spare capacity. They added that they think removing the April 2023 tranche would have a similar effect.
Crude oil production will continue to outpace demand in 2025 despite OPEC+ caps on output, Kpler analyst Homayoun Falakshahi told Reuters.
Crude oil prices hit year-to-date lows on Wednesday, with Brent at $72.63 and WTI at $69.19, driven by weak demand in China and other markets.
OPEC+ delayed plans to ease production cuts, but analysts see challenges due to lost market share and declining prices.
Commodity analysts highlight trend-following strategies and potential for a short-covering rally in oil, while the return of Libyan oil adds further downward pressure on prices.
Oil prices extended gains on Thursday after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil.
Crude oil prices spiked after Israel assassinated Hamas’s political leader on Iranian soil, leading to threats of retaliation from Tehran.
The ongoing conflict in the Middle East, combined with record US oil demand, has created a bullish environment for oil prices.
Early on Thursday morning, WTI was trading around $78.50 while Brent had climbed above $81.