New york: Oil prices rose on Monday despite an OPEC+ decision to raise output in September, as tight inventories and renewed tensions between Washington and Moscow offset concerns over rising supply. International benchmark Brent crude was trading at $69.48 per barrel at 10.50 am local time (0750GMT), showing an increase from the previous session's close of $69.27. The US benchmark West Texas Intermediate (WTI) crude saw a rise of 1.86% to $66.77 per barrel, up from $65.55.
According to Anadolu Agency, prices ticked upwards after eight OPEC+ members, including Saudi Arabia and Russia, agreed to increase oil production by 547,000 barrels per day (bpd) in September. This decision is part of a phased rollback of 2.2 million bpd in voluntary cuts that started on April 1. The September adjustment is aligned with the group's outlined plan of four monthly increments. The group stated that the phase-out might pause or reverse based on market conditions.
Weak US employment data has fueled expectations of a potential Federal Reserve interest rate cut in September, with the US economy adding only 73,000 jobs in July, as per the Labor Department's recent data. High interest rates tend to strengthen the dollar, making oil costlier for other currency holders and dampening demand. US President Donald Trump's renewed calls for rate cuts have raised concerns about the Federal Reserve's independence.
Tensions between Trump and former Russian President Dmitry Medvedev have heightened concerns over global energy security. Trump announced the deployment of two US nuclear submarines in response to Medvedev's comments, intensifying the geopolitical situation. Medvedev warned of a broader conflict involving the US over the Ukraine war, leading Trump to threaten new sanctions on Russia unless the war ends soon.
Despite the increase in supply and a weakening economic outlook, the market factors are complex. Daniel Hynes, a senior commodity strategist at the Australia and New Zealand Banking Group, noted that the combination of these factors is likely to exert further downward pressure on prices, though some bullish factors remain due to geopolitical tensions.