Oil Prices Rise as OPEC+ Pauses Output Hikes for First Quarter 2026
Oil prices climbed on Monday after OPEC+ announced it would pause production increases during the first quarter of next year, a move aimed at easing fears of a potential global supply glut. However, gains were limited by weak manufacturing data from Asia, which raised concerns about sluggish demand in the world’s largest oil-consuming region.
Brent crude futures rose 28 cents (0.43%) to $65.05 a barrel by 07:22 GMT, while U.S. West Texas Intermediate (WTI) increased 25 cents (0.41%) to $61.23 a barrel.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) said on Sunday it will continue its 137,000 barrels per day (bpd) output increase in December, matching production levels from October and November. However, the group confirmed it would pause production hikes in January, February, and March 2026 due to seasonal factors and market conditions.
According to Warren Patterson, Head of Commodities Research at ING, the move signals that OPEC+ is acknowledging a large supply surplus expected in early 2026. “There’s still plenty of uncertainty over the extent of this surplus, especially depending on how U.S. sanctions affect Russian oil flows,” Patterson noted.
Helima Croft, Head of Commodities Strategy at RBC Capital, echoed similar caution, describing Russia as a major wild card due to U.S. sanctions on energy giants Rosneft and Lukoil, as well as ongoing Ukrainian drone attacks on Russian infrastructure.
“There’s ample reason for OPEC+ to take a cautious stance, given the uncertain Q1 supply outlook and expected demand weakness,” Croft said.
A Ukrainian drone strike on Sunday hit Tuapse, one of Russia’s main Black Sea oil ports, causing a fire and damaging at least one vessel.
Oil Market Outlook Remains Uncertain
Both Brent and WTI lost more than 2% in October, marking their third straight monthly decline. Prices hit a five-month low on October 20, pressured by supply concerns and broader economic uncertainty linked to U.S. tariffs.
Analysts surveyed by Reuters expect oil prices to stay relatively stable as rising OPEC+ output and muted demand offset geopolitical risks. Estimates for the global oil surplus range from 190,000 to 3 million bpd.
Data from the U.S. Energy Information Administration (EIA) showed U.S. crude production reached a record 13.8 million bpd in August, up 86,000 bpd from the previous month.
Meanwhile, Asia’s manufacturing sector continues to face headwinds. Business surveys on Monday revealed that weak U.S. demand and ongoing tariffs under President Donald Trump have slowed factory orders across the region, weighing on energy demand.
On Friday, Trump denied reports that the U.S. was planning military strikes in Venezuela, an OPEC member, despite speculation that Washington might expand drug-trafficking operations there.
