Oil prices experienced a slight increase over the last week following a positive move from OPEC+, while China’s ongoing expansion of strategic oil reserves has continued to withdraw excess barrels from the global market. However, there was some reversal of these gains on Thursday amidst ongoing ceasefire discussions between Israel and Hamas.
Previously, there was speculation that OPEC+ might hasten the return of the voluntary output cuts enacted in April 2023, originally set at a rate of 137 thousand barrels per day (kb/d). This could have expedited the process from a 12-month timeframe to 500 kb/d within just three months. OPEC+ swiftly dispelled these rumors with a press release urging “media outlets to maintain accuracy and responsibility in their reporting to avoid inciting unnecessary speculation in the oil market.” Nonetheless, oil prices dipped over 5%, hitting an intra-day low of $64.00 per barrel on October 2.
In contrast, market reaction was generally positive after the eight members of OPEC+ met online last Sunday and quietly announced the addition of 137 kb/d to the market in November. This bullish action has led to a rebound in oil prices, with Brent crude trading at $66.10 per barrel at 11:00 AM ET, while WTI crude was priced at $62.35. OPEC+ also detailed its proposed compensation cuts for overproduction among six members, led by Iraq, which has suggested an immediate adjustment of 130 kb/d from August 2025 through January 2026, tapering to 122 kb/d by June 2026. Analysts from Standard Chartered noted that Iraq is expected to bear the brunt of these cuts, with its reductions alone likely to offset increases from other members.
In addition, Kazakhstan is set to not only boost its total compensation but also expedite its delivery. Initially, Kazakhstan had planned to cut only 35 kb/d in December 2025, before ramping up to 100 kb/d in January 2026, reaching 300 kb/d in February, 450 kb/d in March, 490 kb/d in April, 550 kb/d in May, and 650 kb/d in June 2026, totaling 2.63 million barrels per day. StanChart predicts that Iraq’s adherence to these cuts will be vital for influencing market sentiment regarding the validity of the compensation measures.
That said, the recovery of oil prices has been tepid, with developments in the Middle East contributing to marked volatility, as evidenced on Thursday. This situation highlights the continued bearish sentiment that has characterized the markets for much of the year.
Currently, oil prices remain below several important moving averages, including the 20-day at $67.09 per barrel, the 50-day at $67.40 per barrel, the 100-day at $68.06 per barrel, and the 200-day at $69.83 per barrel. Nevertheless, another bullish catalyst could potentially drive prices higher.
