Oil prices surge by over $1 on OPEC+ output hike delay

Brent crude closed above $73 on Friday, bolstered by speculation over the delayed production hike, although prices remain near year-lows.

Oil prices climbed over $1 in early Monday trading following OPEC+'s Sunday announcement to postpone a planned December production increase by one month. Brent futures rose by $1.14 per barrel (1.56%) to $74.24, while U.S. West Texas Intermediate (WTI) gained $1.14 per barrel (1.64%) to reach $70.63.

This decision marks the second delay in OPEC+'s plans to gradually raise output, as the alliance grapples with weak global demand - particularly from China - and increasing supplies from non-member countries, both of which continue to pressure oil prices. The move sparked an immediate uptick in prices amid an uncertain economic outlook.

The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries along with Russia and other allies, initially planned to raise production by 180,000 barrels per day (bpd) in December. This gradual increase was intended to unwind part of a 2.2 million bpd output cut introduced in recent years to support oil prices. However, concerns over weak demand, especially from China, and increased supply from non-OPEC sources influenced the decision to delay.
The eight OPEC+ members agreed to extend the existing cuts through December, with a statement underscoring the group’s commitment to "full conformity" with their production targets. Brent crude closed above $73 on Friday, bolstered by speculation over the delayed production hike, although prices remain near year-lows. Weak demand and rising supply had previously prompted OPEC+ to delay this output increase from October.

The 23-member OPEC+ coalition will reconvene on December 1 to determine its production strategy for 2025, with the remaining 3.66 million bpd cuts expected to remain in place until the end of 2025 as per the alliance's June agreement.

(With inputs from agencies)