Oil was up by more than 1 per cent on Wednesday on supply concerns as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to leave their output policy unchanged.
Brent crude futures gained 81 cents or 1.26 per cent to sell for $64.90 a barrel while the US West Texas Intermediate (WTI) crude futures appreciated by 95 cents or 1.56 per cent to $61.84 a barrel.
The producers agreed to establish a mechanism for setting baselines for their 2027 oil production, from which each member will make cuts or increases over the last few years.
The 22-member group tasked OPEC headquarters with developing a mechanism to assess countries’ maximum production capacity, to be used as reference for 2027 output baselines for all countries.
Some OPEC+ members such as the United Arab Emirates and Iraq have increased their production capacity, pressing the case for higher quotas, while others such as African members like Nigeria have seen declines.
Meanwhile, a separate meeting on Saturday of eight OPEC+ countries is expected to decide on an increase in oil output for July.
This subset of the larger group may agree an output hike for July of 411,000 barrels per day, the same as in May and June.
This is a strategy by the group’s de-facto leaders, Saudi Arabia and Russia, to punish over-producing allies and to win back market share.
OPEC+ pumps about 50 per cent of the world’s oil and has agreed three layers of output cuts since 2022 to support the market.
Prices also gained support over demand for the summer driving season just as non-OPEC+ crude output may come in flat in the first half of the year, coupled with risks of Canadian wildfires hurting supply.
Analysts also said prices could respond positively if there was progress on global trade talks or resolving US-Iranian friction.
It was reported that Iran might allow the United Nations’ nuclear watchdog to send US inspectors to visit nuclear sites if the country’s talks with the US succeed.
Meanwhile, American Petroleum Institute (API) figures on Wednesday showed that US crude stocks fell by 4.24 million barrels last week.
Official data from the Energy Information Administration (EIA) on US crude inventories will be released on Thursday, due to Monday’s holiday in the world’s largest oil producer.