Crude oil prices are starting to grow again, reaching 70 dollars a barrel, thanks to renewed geopolitical tensions and OPEC+’s decision to further postpone the decision on increasing production quotas.
Crude oil movements
Oil gained almost 2% this morning and strengthens the rise recorded before the weekend. The closest contract on the Brent recorded an increase of 1.88% to 74.47 dollars per barrel, while the one on the WTI American records an increase by 1.93% to 70.83 dollars/barrel. Despite this performance and the gains recorded last Friday, crude oil is still recording a negative performance compared to last Monday and has lost approximately 4% compared to the beginning of October.
Yet another postponement of OPEC+
OPEC+ he agreed to postpone the production increase for a month planned for this autumn (about 180 thousand barrels more from October then postponed to early December), due to concerns related to weak demand and the recent collapse in prices. Eight members of the expanded cartel, including Saudi Arabia and Russiaagreed to extend the production cuts regime until December and in particular the voluntary cut of 2.2 million barrels implemented together with Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman. The postponement is valid until the end of December 2024.
Furthermore, the eight countries reiterated theirs collective commitment to comply with the policy line announced by OPEC, including further ones voluntary adjustments of production and the monitoring, together with the related ones compensations to be carried out in September 2025 for volumes overproduced from January 2024.
Tensions in the Middle East
Oil prices had already risen sharply last Friday on news of a possible Iran’s retaliatory attack against Israel. Tehran, according to what Israeli intelligence reported, is preparing an attack from Iraqi territory in the next few days, in response to the Israeli attack on 26 October. The risk that the conflict will spread and affect crude oil supplies from this region has caused crude oil to rise, which at the beginning of the week had, on the contrary, priced in a softer evolution of the conflict in the Middle Eastern region.
The good news from the economy
For months, oil has also been discounting the prospects of a slowdown in demand and the slowdown of the world economy, especially the American and Chinese ones. However, last week they arrived unexpectedly positive news: Chinese manufacturing activity in October it recovered, with the Caixin/S&P Global PMI index rising to 50.3 points from 49.3 in the previous month; the American manufacturing PMI at the same time it increased to 48.5 points from the 47.8 of the preliminary estimate, although it did not exceed the key threshold of 50 points.
