Oil prices held steady on Tuesday amid uncertainty over voluntary output cuts by OPEC+ and as continued tension in the Middle East spurred supply concern.
Brent crude futures LCOc1 edged up 13 cents to $78.16 a barrel by 0106 GMT, while U.S. West Texas Intermediate crude futures CLc1 were up 18 cents at $73.22 a barrel.
Brazil’s decision to join OPEC+ could have a seismic effect on the global oil production landscape, although it remains to be seen if the country will alter its production.
Brazil’s oil boom poses a significant threat to the ability of OPEC+ to control oil prices, and recent investments from Petrobras suggest the boom won’t end any time soon.
As well as Brazil, OPEC+ continued to face challenges from rising U.S. oil output and threats of increased production from non-consortium member Guyana.
Macroeconomic factors continue to weigh on oil prices this week, despite the insistence of OPEC+ members that the group’s production cuts will tighten the oil market.
Division and dissent within OPEC+ over deeper production cuts led to an unconvincing announcement last week which pushed prices lower.
Oil prices extended gains early on Wednesday as a storm continues to disrupt crude loadings in the Black Sea and the market awaits news about the next move from OPEC+ set to hold a meeting on Thursday.
Last week, OPEC+ decided to keep current oil production cuts in effect until the end of the year.
Crude oil prices are on the rise, driven by stark cutbacks imposed by Saudi Arabia and Russia, the main forces behind OPEC+.
Despite the fact that U.S. oil producers are now deploying the lowest number of drilling rigs in more than a year and a half, America’s crude oil production is set to hit a monthly record in September—at 13 million barrels per day (bpd), according to estimates by Rystad Energy.
Oil prices are set for a surge in volatility amid an expected “significant supply shortfall” on the market in the fourth quarter of 2023, due to the Saudi-led cuts to OPEC+ oil supply, the International Energy Agency (IEA) said on Wednesday.
In a mere four years, Guyana went from first discovery to first oil, a rapid timeframe in an industry where it can take years to bring major energy projects online. The former British colony is now a major South American oil producer and global petroleum exporter.