Oil Prices Firm As Sanction Risks Outweigh OPEC+ Output Hike

OPEC+, which includes the Organisation of the Petroleum Exporting Countries, Russia and other partners, announced on Sunday that production would rise again from October.

Market concerns were heightened as Russia launched its most significant air assault of the war on Ukraine, striking central Kyiv and killing at least four people, according to Ukrainian officials.

Source : Freepik

Oil prices advanced more than 1 per cent on Monday, reversing some of last week’s declines as the threat of fresh sanctions on Russian crude following a major strike in Ukraine overshadowed an OPEC+ decision to increase production.

Brent crude rose 80 cents, or 1.2 per cent, to $66.30 a barrel by 9:15 AM. US West Texas Intermediate (WTI) crude gained 75 cents, or 1.2 per cent, to $62.62 a barrel, reported Reuters.

Both benchmarks had slumped more than 2 per cent on Friday after a weaker-than-expected US jobs report dampened the outlook for energy demand, capping a weekly loss of over 3 per cent.

OPEC+ Moves to Increase Supply

OPEC+, which includes the Organisation of the Petroleum Exporting Countries, Russia and other partners, announced on Sunday that production would rise again from October. The decision, led by Saudi Arabia’s push to regain market share, came as a surprise to some analysts, given the likelihood of excess supply during the northern hemisphere winter.

Eight member states will add 137,000 barrels per day (bpd) from October, far below the monthly increases seen earlier in the year. For comparison, September and August increases stood at around 555,000 bpd, while July and June saw 411,000 bpd.

Satoru Yoshida, commodity analyst at Rakuten Securities, noted, “Buying emerged as the output increase was smaller than anticipated, while fading prospects for peace in the Russia-Ukraine war and views that Russian oil won’t flood the market also supported prices.”

Russia-Ukraine Conflict Intensifies

Market concerns were heightened as Russia launched its most significant air assault of the war on Ukraine, striking central Kyiv and killing at least four people, according to Ukrainian officials. The attack ignited a blaze in the main government building, underlining the ongoing instability in the region.

US President Donald Trump remarked on Sunday that European leaders would travel to Washington early this week to discuss ways to resolve the conflict. While admitting he was “not happy” about the state of the war, he reiterated his belief that it could soon be settled.

Analysts Eye Supply Outlook

Toshitaka Tazawa, analyst at Fujitomi Securities, said: “The oil market was supported by relief over OPEC+’s modest output hike and a technical bounce following last week’s decline. Expectations of tighter supply from potential new U.S. sanctions on Russia are also lending support.”

Goldman Sachs, in a weekend note, forecast a slightly larger oil surplus in 2026 as capacity upgrades in the Americas offset weaker Russian output and rising demand. It maintained its Brent and WTI forecasts for 2025 and projected 2026 averages at $56 and $52 per barrel, respectively, while noting that risks were “two-sided but skewed modestly to the upside.”

With sanctions risks intensifying, OPEC+ cautiousness surprising markets, and the war in Ukraine entering a more violent phase, oil traders remain braced for continued volatility in the weeks ahead.

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