Oil climbs as Saudi-led OPEC+ cracks the taps—just a notch

Oil edged higher Monday after a Saudi-led bloc of producers said they’ll pump a little more crude from October—137,000 barrels a day, to be precise. It’s a sliver of global supply, but the move screams confidence: after years of holding back barrels, OPEC+ is clearly testing a gentler, more upbeat playbook.

Brent crude, the global benchmark, rose about 1.5% to $66.52 on the ICE by midday, clawing back some of last week’s losses.

What’s changing:

• The unwind continues: Eight OPEC+ members—including Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan, Algeria and Oman—said they’ll peel back another layer of past cuts. They’ve already finished reversing one package and are now nibbling at a second, 1.65 million b/d tranche agreed in 2023. How much comes back “in part or in full” will depend on market conditions. A third, 2 million b/d set of cuts still sits on the shelf.
• Small step, big signal: The October bump is tiny, but it tells traders the group thinks the market can handle more supply without buckling.

“Being bold has been a successful strategy so far this year,” said Richard Bronze of Energy Aspects.

When the group first started adding barrels in April, prices briefly wobbled on glut fears. Since then, crude has stabilized even as the pace of increases picked up. A big reason: the headline additions have outpaced the actual barrels. Energy Aspects reckons the Saudi-led cohort is producing ~1.7 million b/d more than in March—not the 2.5 million b/d that was trumpeted. Many members simply struggled to ramp up, easing trader nerves.

Saudi Arabia, with spare capacity to burn, has reaped most of the upside—about 70% of the group’s added crude from April to July, per the IEA.

The coalition’s web of staggered cuts and staged unwinds has grown so complex that even seasoned market hands say it muddies the message—part of why Riyadh appears keen to simplify. And yes, US politics lurk in the background: moving ahead with increases despite trade-war jitters helps keep a lid on gasoline prices, something Washington always watches.

For now, the takeaway is simple: OPEC+ thinks demand can absorb a careful trickle of new barrels. Traders agree—at least until the next headline lands.

Reuters and the New York Times contributed to this report.