Oil rises on OPEC+ output plan, Venezuela worries
Oil prices rose as much as 1.5 percent after OPEC+ members reaffirmed a plan to pause production increases in the first quarter of next year and the possibility of U.S. action against oil producer Venezuela unsettled the market.
Brent crude futures later pared gains by 0.98 per cent, or US$62.99 ($A96.13) per barrel.
US West Texas Intermediate crude rose 57 cents, or 0.99 per cent, to US$59.12 ($A90.23) a barrel.
The Organization of the Petroleum Exporting Countries and its allies first agreed to a pause in early November, slowing the effort to regain market share due to fears of oversupply.
After Sunday’s meeting, OPEC+ said it “reaffirmed the importance of taking a cautious approach and maintaining full flexibility to continue pausing or reversing additional voluntary production adjustments.”
Commonwealth Bank of Australia analyst Vivek Dhar said the Sunday result was widely expected given the earlier decision.
“Market concerns about a growing glut in global oil markets likely played a role in the OPEC+ decision,” Dhar wrote in a client note.
US President Donald Trump’s move to close Venezuelan airspace has created new uncertainty in the oil market, given that the South American country is a major oil producer.
“The support to the market after President Trump said he was considering closing airspace over the country has increased supply risks to Venezuelan crude,” ING analysts wrote in a client note.
Trump said Sunday that he spoke with Venezuelan President Nicolas Maduro but did not elaborate, nor did he explain his airspace comments or whether they had signaled a military strike against the country.
“Don’t make any sense of this,” Trump said.
In Europe, growing uncertainty over the Russia-Ukraine peace deal has reversed the downward trend of the past two weeks as a closer look at the peace agreement raises the prospect of large amounts of now-sanctioned Russian oil flowing into the market.
The Ukrainian military announced via social media on Saturday that it had hit a Russian oil refinery as well as the Beriev military aviation facility in the Rostov region.
Separately, Ukrainian navy drones hit two sanctioned tankers heading to a Russian port on the Black Sea to pick up oil for foreign markets.
Ukrainian and US officials met in the US state of Florida on Sunday for a meeting on the war that US Secretary of State Marco Rubio described as “very productive”.
He said more work was needed to end the war, which is now in its third year.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
