Oil prices saw a modest uptick on Monday following the announcement of OPEC+ extending voluntary output cuts until the end of the second quarter.
The decision largely anticipated by the market contributed to Brent crude oil 14 cents gain to $83.69 per barrel, while U.S. West Texas Intermediate (WTI) prices edged up by 2 cents to hit $79.99 a barrel.
ANZ analysts remarked that signs of tightness in the physical market and ongoing output cuts by the OPEC+ alliance were key drivers behind the surge in crude oil prices.
The agreement entails a continuation of the voluntary output cuts of 2.2 million barrels per day (bpd) into the second quarter.
Russia’s unexpected pledge to reduce its oil production and exports by an additional 471,000 bpd in the second quarter further bolstered market sentiment.
Jorge Leon, a senior vice president at consultancy Rystad Energy, highlighted that the OPEC+ decision would result in lower production from the group, mitigating concerns about rising output outside the alliance.
Leon explained that the move demonstrated a strong unity within OPEC+ and a determination to uphold oil prices above $80 per barrel in the coming months.
Rising geopolitical tensions, including the Israel-Hamas conflict and Houthi attacks on Red Sea shipping, also contributed to the support for oil prices.
Amid these developments, U.S. Vice President Kamala Harris urged Hamas to agree to an immediate ceasefire while calling on Israel to enhance aid deliveries into Gaza, signaling ongoing efforts to address the regional unrest.
