Oil Prices Rebound Following OPEC+ Decision
On Tuesday, oil prices surged approximately 3%, driven by anticipation of increased demand in Europe, China, and heightened political risks in the Middle East. The Brent futures, a benchmark for oil markets in the Middle East, Europe, and Africa, rose by 3.19% to $62.15 per barrel, marking the first increase after six consecutive days of losses. Meanwhile, West Texas Intermediate (WTI), the primary reference for the U.S. oil market, gained 3.43% to $59.09 per barrel following two sessions of declines.
Factors Driving Oil Price Increase
Gabriela Siller, director of analysis at Banco Base, attributed the upward pressure to expectations of higher demand in China as markets reopen following a closure since May 1. Additionally, the European Commission proposed adding more individuals and over 100 vessels linked to Russia’s “shadow fleet” to Package 17 of sanctions against the Russian government, potentially reducing supply. Moreover, increased geopolitical risks in the Middle East, following Israel’s attacks on Houthi targets in Yemen as retaliation for an attack on Tel Aviv’s Ben Gurion Airport, also contributed to the price surge.
OPEC+ Agrees to Accelerate Production Increase
During the weekend, OPEC+, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, decided to expedite the increase in oil production for the second consecutive month.
The decision was supported by rising consumer spending in China during the May 1 celebration and the return of market participants following a five-day holiday.
However, analysts from Scotiabank warned that the recent oil price rebound might be short-lived due to an imminent OPEC+ quota increase of 411,000 barrels per day. They anticipate that as Saudi Arabia increases its production to meet the new quota, global supply could exceed demand by up to 1 million barrels per day throughout the remainder of 2025 and into 2026.
The analysts cautioned that significant price drops might be necessary to prompt major producers to alter their current production plans. The Brent prices could need to fall to $40 or lower before all members return to the negotiation table to resolve production disputes.
Mixed Performance Among Oil Companies
On Tuesday, the average stock price for oil companies in the market rose by 0.08% following the international oil price surge.
Among the largest companies by market value, Exxon Mobil led with a 1.39% increase, followed by TotalEnergies with a 1.09% improvement. Saudi Aramco climbed 0.32%, Chevron rose 0.07%, and ConocoPhillips gained 0.02%. However, PetroChina and Shell experienced declines of 0.38% and 1.93%, respectively.
