Oil prices soar after OPEC+ delays production hike

Oil prices rose sharply Monday after a group of top producers said they will delay a planned output hike in December by at least a month, citing recent pressure on prices from weak demand. 

At 04:45 ET (09:45 GMT), Brent oil futures rose 2.6% to $75.03 a barrel, while West Texas Intermediate crude futures rose 2.9% to $71.47 a barrel.  OPEC+ delays production hike 

The Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, announced on Sunday that its members will delay a planned output hike of 180,000 barrels per day by at least a month.

The cartel had previously outlined plans to begin winding down its most recent 2.2 million bpd output curbs from December.

But plans to increase production raised concerns in the group about weaker oil prices, especially as prices slid to a near three-year low in September. The OPEC+ had slashed production by nearly 6 million bpd in the past two years to support prices. 

Weakness in China was the biggest point of concern for oil markets, as the world’s biggest oil importer grappled with a prolonged downturn in economic growth. Oil imports to the country also weakened sharply in recent months.

"With continued uncertainty around 2025’s demand outlook, the pause decision is consistent with the leadership’s June pledge to remain prudent about production decisions and to avoid sudden shocks," said analysts at RBC Capital Markets, in a note. "Concerns that OPEC was poised to oversupply a fragile market have been weighing significantly on sentiment." US elections, China stimulus in focus 

Oil prices were also aided by a softer dollar , as the greenback retreated in anticipation of the U.S. presidential election this week. Recent polls showed Donald Trump and Kamala Harris were set for a tight race.

Both candidates have promised to increase domestic oil production, which is already at record highs of over 13 million bpd.

Focus this week is also on a meeting of China’s National People’s Congress this week, where policymakers are widely expected to approve more fiscal spending to boost economic growth.

Recent reports said the government could approve as much as $1.4 trillion in stimulus over the coming years to support growth. Middle East tensions remain 

Both crude benchmarks posted hefty weekly declines last week, but edged up on Friday on reports that Iran could launch a retaliatory strike on Israel within days.

On Thursday, U.S. news website Axios said Israeli intelligence suggested that Iran was preparing to attack Israel from Iraq within days, citing two unidentified Israeli sources.

"Though the market sold off sharply after Israel avoided targeting Iranian nuclear and energy infrastructure, the threat of Iranian retaliation remains a clear and present danger," RBC added. "Certainly, a continuing cycle of retaliatory strikes between Israel and Iran raises the risk that oil facilities will be caught in the crosshairs."

(Ambar Warrick contributed to this article.)

Source: Investing.com