Oil rises after OPEC output cut, Middle East tensions

Oil prices reversed course and rose again amid rising tensions and data on a decline in OPEC output despite investors’ expectations for an increase in OPEC+ output from October and growing signs of weak demand in China and the United States, the world’s biggest oil consumers, raising concerns about future consumption growth.

Brent crude futures rose 59 cents, or 0.77%, to settle at $77.52 a barrel. West Texas Intermediate crude futures rose 52 cents, or 0.6%, to $74.06 a barrel.

Six sources from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, told Reuters that the group was close to moving forward with a planned increase in oil output from October.

Eight OPEC+ members are set to increase their output by 180,000 barrels per day in October, as part of a plan to start gradually removing the latest tranche of 2.2 million barrels per day of production cuts while continuing further reductions until the end of 2025.

Russia confirmed today its commitment to OPEC decisions starting in late August.

Both Brent and West Texas Intermediate crude suffered losses for two consecutive months as economic concerns in China and the United States offset the impact of Libyan supply disruptions and rising geopolitical tensions in the Middle East.

In Libya, the Arabian Gulf Oil Company resumed production at up to 120,000 barrels per day to meet domestic needs, while exports remain halted, engineers said on Sunday, after a dispute between armed factions caused most of the country’s oil fields to be shut down.

Pessimism over China’s demand growth deepened after an official survey showed on Saturday that manufacturing activity there fell to a six-month low in August as retail prices at factories fell and orders slumped, although a private survey of smaller, export-dependent companies on Monday showed signs of a tentative recovery in the same month. U.S. oil consumption slowed in June to its lowest seasonal level since the COVID pandemic in 2020, U.S. Energy Information Administration data showed on Friday.