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At the beginning of November, OPEC+ halted its plan to increase oil production to avoid oversupply.
Oil prices rose by 2% on December 1 after OPEC+ members confirmed their production stabilization plan. Additional concerns over supply were triggered by the temporary suspension of exports by the Caspian Pipeline Consortium due to a large-scale attack by Ukrainian drones and rising tensions between the US and Venezuela, Reuters reports.
Brent crude futures increased by $1.22, or 1.96%, to $63.60 per barrel. West Texas Intermediate (WTI) crude rose by $1.22, or 2.08%, to $59.77 per barrel. Both contracts had fallen for the fourth consecutive session on November 28, marking the longest decline streak of 2023, as expectations of increased global supply weighed on the market.
According to Reuters, in early November, OPEC+ and its allies agreed to pause production increases to prevent oversupply and curb competition for market share. Following the Sunday meeting, the alliance stated that it confirmed the need for a cautious approach and remains fully flexible to either extend the pause or cancel additional voluntary production adjustments. This decision was anticipated by market participants.
“Earlier, there was much talk about an oil surplus, so OPEC+’s decision to maintain the target production level provided some relief and helped stabilize expectations for supply growth in the coming months,” said LSEG Senior Analyst Anh Pham.
It was reported that on November 29, US President Donald Trump announced the closure of Venezuelan airspace, creating uncertainty in the oil market. The following day, he stated that he had spoken with Venezuelan President Nicolás Maduro, without specifying details or clarifying whether military action was being considered.
Analysts at ING noted in a client briefing that supply risks are further increasing due to Ukraine’s recent strikes on Russian energy infrastructure. The Caspian Pipeline Consortium, owned by Russia, Kazakhstan, and the US, announced a temporary suspension of operations on November 29 after its pier at the Russian terminal on the Black Sea was damaged by a Ukrainian drone. The consortium handles more than 1% of global oil.
Earlier reports indicated that Brent crude futures had dropped by 14 cents, or 0.22%, to $62.42 per barrel, while WTI crude fell by 15 cents, or 0.26%, to $57.91 per barrel. Both benchmark crude types lost about 3% of their value last week, reaching the lowest level since October 21 due to market concerns that a so-called peace agreement between Russia and Ukraine could lead to the lifting of sanctions on Moscow and the return of previously restricted supplies to the market.
