Crude Oil Settles Higher as OPEC+ Boosts Crude Production Below Expectations

October WTI crude oil (CLV25) on Monday closed up +0.39 (+0.63%), and October RBOB gasoline (RBV25) closed down -0.0056 (-0.29%).

Crude oil and gasoline prices on Monday settled mixed.  Crude found support Monday from a weaker dollar and after OPEC+ raised its production at a lower rate than expected.  Gains in crude prices were limited after Saudi Arabia cut the prices of all of its crude for buyers in Asia for delivery in October, a sign of weaker demand.

Crude prices moved higher on Monday after OPEC+ agreed on Sunday to raise its crude production by 137,000 bpd, starting in October.  This is less than the 547,000 bpd increase the group decided to boost output in September and August.  OPEC+ also said restarting the remainder of the 1.66 million bpd crude production it had idled will be contingent on “evolving market conditions.”

Crude prices fell back from their best levels after Saudi Arabia cut prices for all of its crude grades today by $1 a barrel for buyers in Asia for delivery in October, a sign of weak demand for crude and a steeper cut than expectations of a -50 cents per barrel reduction.

Reduced Russian crude output is tightening global oil supplies and is supportive of prices.  Ukrainian drone and missile attacks on Russian refineries have curbed Russia’s crude-processing runs to 5.09 million bpd in the first 27 days of August, the lowest monthly average in over 3.25 years.

Crude prices have support on concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies.  US Treasury Secretary Bessent said last Tuesday that the US “will be examining sanctions on Russia very closely” due to the ongoing war in Ukraine.  President Trump has threatened “very big consequences” if Russia doesn’t come to the negotiating table.  Last Friday, German Chancellor Merz and French President Macron called for secondary sanctions on Russia for its war in Ukraine.  They said they will push for measures targeting “companies from third countries that support Russia’s war.”

An increase in crude oil held worldwide on tankers is bearish for oil prices.  Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +6.8% w/w to 77.69 million bbl in the week ended September 5.