Oil gained after Saudi Arabia and Russia reaffirmed they will stick with oil supply curbs of more than 1 million barrels a day through the end of the year.
Global benchmark Brent crude rose above $86 a barrel. The announcement by the OPEC+ heavyweights on Sunday comes after the fading Israel-Hamas war premium and concerns over weaker global demand pushed oil prices down by more than 6% last week. The dollar also dropped, making commodities priced in the currency more appealing.
Crude surged after the Hamas attack on Israel on Oct. 7, but those gains have now been almost entirely unwound as the war has remained contained and not disrupted supplies from the Middle East, the source of around a third of the world’s oil.
While there’s still a chance the conflict could spread across the region, the impact on prices has given way to fresh concerns about a slowing global economy. A surprise contraction in Chinese manufacturing last month has raised questions about the recovery in the world’s biggest oil importer, while US stockpiles are growing.
“We believe these voluntary supply cuts are likely to be extended into the first quarter of 2024 — given seasonally weaker oil demand at the start of every year, ongoing economic growth concerns, and the aim of producers and OPEC+ to support the oil market’s stability and balance,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Saudi Aramco, meanwhile, kept its December official selling prices for two of five oil grades unchanged to Asian customers. However, the kingdom slashed its prices for Europe, a further sign of the concern over consumption in the region.
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