Oil prices rose more than $1 on Monday, regaining ground after last week’s losses, as markets assessed the latest decision by the OPEC+ alliance to raise production only modestly while also weighing the possibility of further sanctions on Russian crude.
Brent crude gained $1.16, or 1.8%, to trade at $66.66 a barrel by 0858 GMT. U.S. West Texas Intermediate (WTI) crude climbed $1.09, or 1.8%, to $62.96 a barrel. Both benchmarks had fallen more than 2% on Friday after weaker U.S. jobs data raised concerns about fuel demand, and they lost more than 3% over the previous week.
OPEC+ Output Increase Smaller Than Expected
OPEC+, which brings together the Organisation of the Petroleum Exporting Countries and allies including Russia, announced on Sunday that it would raise oil production in October by around 137,000 barrels per day (bpd).
While the increase continues the alliance’s broader strategy of gradually easing supply cuts introduced during the pandemic, analysts noted that the figure was well below previous hikes. By comparison, the group had agreed to increase output by about 555,000 bpd for September and August, and by more than 400,000 bpd in July and June.
“The market had run ahead of itself regarding this OPEC+ increase,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Today we’re seeing a classic ‘sell the rumour, buy the fact’ reaction.”
The smaller hike suggests that producers remain cautious, especially with concerns about a potential supply glut during the winter months in the Northern Hemisphere.
Why OPEC+ Is Moving Carefully
OPEC+ has been balancing two competing pressures. On one hand, major oil-importing nations, particularly in Europe and Asia, have been urging the group to pump more crude to ease tight supply and help bring down prices. On the other hand, producers are wary of oversupplying the market at a time when economic growth remains uneven, particularly in China, and demand forecasts are uncertain.
Several member countries have also been struggling to meet their production quotas. Technical challenges, lack of investment in new fields, and sanctions on Russia have limited the group’s ability to deliver significant output hikes.
According to analysts, this means that the announced 137,000 bpd increase may have only a marginal impact, as some of the barrels were already being produced above quota levels.
Russia-Ukraine Conflict Adds Pressure
Beyond OPEC+ policy, the Russia-Ukraine war continues to play a central role in global oil markets.
Over the weekend, Russia launched one of its most significant aerial strikes of the conflict, setting fire to a government building in central Kyiv and killing at least four people, according to Ukrainian officials. The attack underscored ongoing geopolitical risks that could disrupt energy flows.
At the same time, U.S. President Donald Trump signalled on Sunday that Washington was preparing for a possible “second phase” of sanctions targeting Moscow’s energy sector. While the United States and European Union have already imposed restrictions on Russian oil exports, new sanctions could extend to buyers of Russian crude, further tightening global supply.
“Expectations of tighter supply from potential new U.S. sanctions on Russia are also lending support,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Energy trader Gunvor’s head of research, Frederic Lasserre, added that additional sanctions could disrupt existing crude flows and lead to higher price volatility.
Market Reaction and Price Movements
The modest OPEC+ hike and potential sanctions helped oil recover some of last week’s losses. Traders described Monday’s move as partly technical, with prices bouncing after steep declines.
Both Brent and WTI had been under pressure after weak U.S. jobs data on Friday suggested slower economic growth, which could dampen energy demand. A stronger U.S. dollar also weighed on oil by making commodities more expensive for holders of other currencies.
Still, the rebound highlighted the market’s sensitivity to geopolitical risks and OPEC+ policy signals.
Broader Energy Outlook
Looking beyond October, analysts say oil prices will depend on how OPEC+ manages supply in the face of fluctuating demand forecasts. The International Energy Agency (IEA) has warned of potential oversupply in 2026 as new production projects in the Americas come online.
Goldman Sachs, in a weekend note, forecasted a slightly larger surplus in 2026, citing upgrades in supply from North and South America that outweigh reduced Russian output. The bank left its Brent and WTI price forecasts for 2025 unchanged but projected average prices of $56 and $52 a barrel, respectively, in 2026.
For now, however, short-term risks remain tilted to the upside. A colder-than-expected winter in Europe or further escalation of sanctions could tighten supplies quickly, while slower growth in Asia could cap demand.
Regional Impact
- Europe: Heavily dependent on imports, Europe continues to diversify away from Russian crude. Any new sanctions could strain refiners and raise costs.
- United States: Rising domestic production has helped cushion U.S. markets, but refiners still rely on global supply chains. Gasoline and diesel prices remain politically sensitive.
- Asia: China and India remain the largest incremental buyers of Russian oil at discounted rates. New sanctions could force both countries to adjust their buying strategies.
Expert Views
Several analysts believe OPEC+ is deliberately taking a conservative approach. “The group wants to avoid the mistakes of the past when sharp increases in output led to price collapses,” said Carsten Fritsch of Commerzbank.
Others argue that the modest increase shows limits to the group’s spare capacity. “OPEC+ talks about raising output, but the reality is many producers can’t deliver more barrels,” noted Amrita Sen, co-founder of Energy Aspects.
Conclusion
The combination of a smaller-than-expected OPEC+ output hike and the prospect of tougher sanctions on Russia has given oil prices short-term support. Yet the broader outlook remains uncertain, shaped by demand trends, economic signals, and geopolitical risks.
For now, markets will watch closely how OPEC+ manages supply in the coming months and whether U.S. and European policies add new disruptions to global crude flows.
