Mid-East unrest and OPEC+ cut uncertainties keep oil prices stable

5 Dec 2023 , 10:02 AM

Tuesday’s oil prices were stable due to supply concerns raised by ongoing Middle East unrest and ambiguity around OPEC+’s voluntary output reduction.

U.S. West Texas Intermediate crude prices were up 18 cents at $73.22 a barrel, while Brent crude futures increased by 13 cents to $78.16 a barrel.

The price of oil for holders of foreign currencies is usually increased by a stronger dollar, which may reduce the demand for oil.

On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, which includes Russia, came to an agreement to implement voluntary output cuts amounting to around 2.2 million barrels per day (bpd) for the first quarter of 2024. Saudi Arabia took the lead in carrying over its existing voluntary cut.

However, at least 1.3 million bpd of those reductions were an extension of Saudi Arabia’s and Russia’s pre-existing voluntary limitations.

In an interview with Bloomberg on Monday, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, stated that OPEC+ oil output restrictions may ‘absolutely’ go past the first quarter if necessary.

However, attacks on three commercial vessels in international waters in the southern Red Sea, as well as the resumption of combat in the Israel-Hamas war, increased concerns about supplies.

These events came after a slew of assaults in Middle Eastern seas since Israel and the terrorist Palestinian organization Hamas declared war on each other on October 7.

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