Oil prices barely budge as OPEC+ keeps output hike smaller than expected

SINGAPORE: Oil prices were little changed on Tuesday as optimism from a smaller-than-expected OPEC+ output hike was overshadowed by growing concerns over weakening global demand and the risk of a supply glut.

Brent crude futures inched up by just 1 cent to $65.48 a barrel by 0014 GMT, while US West Texas Intermediate (WTI) crude held firm at $61.69. Both benchmarks had climbed more than 1 percent in the previous session, supported by the surprise move from the oil producers’ alliance.

OPEC+ lifts output modestly

The Organisation of the Petroleum Exporting Countries and its allies, including Russia, agreed over the weekend to raise their collective oil production by 137,000 barrels per day starting in November. The increase was far smaller than what markets had feared, calming concerns about an excessive rise in supply.

“Crude oil prices gained after OPEC announced a smaller than expected production rise,” said ANZ analyst Daniel Hynes. “This staved off fears of an even bigger surplus than the one the market is anticipating in coming months.”

So far this year, OPEC+ has raised its production targets by more than 2.7 million barrels per day, roughly equal to 2.5 percent of global demand.

Market weighed by demand concerns

Despite the modest OPEC+ increase, analysts warned that oil prices could remain under pressure as demand falters in key markets. Slower global growth, compounded by trade tensions and higher tariffs from the United States, has dampened energy consumption forecasts.

Adding to the uncertainty, Russia’s Kirishi oil refinery halted its most productive distillation unit after a drone attack and fire on October 4. Industry sources said the unit’s recovery could take about a month, limiting Russian output in the short term.

While geopolitical tensions, particularly the conflict between Russia and Ukraine, continue to lend some support to prices, traders remain cautious. Many fear that rising production from both OPEC+ and non-OPEC producers could tilt the market back into surplus before the end of the year.