Oil prices gained 1 per cent on Monday after a production increase planned for November by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) was more modest than expected.
Brent crude improved by 94 cents or 1.46 per cent to trade at $65.47 a barrel and the US West Texas Intermediate (WTI) crude grew by 81 cents or 1.33 per cent to $61.69 per barrel.
On Sunday, OPEC+ said it would raise production from November by 137,000 barrels per day, matching October’s figure, amid persistent concern over a looming supply glut. This decision tempered some concerns about supply additions.
Although Russia was advocating for an increase of 137,000 barrels per day to avoid pressuring prices, Saudi Arabia would have preferred double, triple or even four times that to quickly regain market share.
So far this year, the OPEC+ alliance has increased its output targets by more than 2.7 million barrels per day, representing approximately 2.5 per day of global demand.
Analysts noted that the group clearly remains intent on reclaiming market share from non-OPEC producers while not pushing prices too low.
The modest production update also comes at a time of rising Venezuelan exports, the resumption of Kurdish oil flows via Turkey, and the presence of unsold Middle Eastern barrels for November loading.
The Kirishi oil refinery, one of Russia’s largest, halted its most productive crude unit following a drone attack and subsequent fire on October 4, with its recovery expected to take about a month.
While exact daily loss estimates remain unconfirmed, the halt could take up to 160,000 barrels per day off the market for a month, considering that Kirishi’s total crude-processing capacity is around 360,000 barrels per day.
The shutdown tightens supplies of diesel and middle distillates, which are already under pressure from sanctions, logistical bottlenecks, and other disruptions.
Russian President Vladimir Putin recently warned that removing Russian crude or curbing its refined output could push prices well above $100 per barrel.
Expectations of weak demand fundamentals in the fourth quarter are another factor limiting the market’s upside, with expectations that the refinery maintenance season starting soon in the Middle East could also help to cap prices.