Oil prices steadied as market participants weighed signs that OPEC+ might again delay its planned output increase, offsetting some of the recent easing in geopolitical tensions following a cease-fire agreement between Israel and Hezbollah. Brent crude traded below $73 per barrel after dropping nearly 3% over the past two sessions, influenced by expectations of a truce, while West Texas Intermediate (WTI) held steady above $68.
OPEC+ is set to meet this weekend, and delegates have indicated that discussions are underway to postpone the planned restoration of oil production set for January, citing concerns about a potential oversupply. These discussions reflect ongoing worries about the global oil market’s balance.
In the Middle East, Israel and Hezbollah reached a 60-day ceasefire agreement after weeks of U.S.-mediated negotiations. However, shortly after President Joe Biden announced the deal, hostilities resumed, underscoring the challenges of securing a long-term resolution.
Crude oil prices have remained in a narrow range since the beginning of last month, impacted by conflicting market signals. The outlook remains uncertain, with several factors, including the policies of a potential second Trump administration and geopolitical risks tied to Russian and Iranian supplies, expected to influence future price movements.
“We’re pretty fairly priced” with Brent between $70 and $75 a barrel, noted Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “It’s almost certain that OPEC+ will decide to extend the current production cuts through the first quarter.”
On the supply side, the American Petroleum Institute (API) reported a 5.9 million-barrel drop in U.S. crude inventories last week, marking the largest decline since August. Government figures, due later on Wednesday, are expected to confirm this reduction.
Meanwhile, a Canadian petroleum industry group warned that President-elect Trump’s proposed tariffs, which could target up to 4 million barrels of Canadian crude imports, might lead to higher gasoline and energy costs for U.S. consumers.
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