Oil prices hit their highest levels since 2014 as officials from OPEC, Russia and other oil producers decided on Monday to stick with their previous agreement to only gradually add oil to the market. The announcement came despite rising demand for energy as businesses around the world resumed operations.
The 23-member group, known as OPEC Plus, said in a terse news release that it would raise production by a modest 400,000 barrels a day in November, less than 0.5 percent of world demand, under a deal reached in July.
In effect, the group shrugged off political and commercial pressure to ramp up oil production to ease a tightening market.
“It’s going to take oil prices sustaining above $80 a barrel for a period of time or pushing sharply higher” for the Organization of the Petroleum Exporting Countries to consider changing its plan, said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
Oil prices climbed on the news. West Texas Intermediate, the American standard, leapt to about $78 a barrel, its highest level since late 2014, while Brent crude, the international benchmark, was up nearly 3 percent to $81.56 a barrel. Oil prices have more than doubled in a year.
So far, analysts say, recent increases in the price of oil have not been sufficient to knock OPEC Plus off the course it worked out in July. In addition, prices at these levels are probably a pleasant surprise for the oil producers.
“There are squalls around, but they don’t want to rock the boat,” said Bhushan Bahree, a senior director at IHS Markit, a research firm.
OPEC Plus did little to explain its reasoning. The group said it was “acting in view of current oil market fundamentals.”
Analysts say the group is more cautious in its outlook than some industry observers who see demand for oil far outstripping supply in the months ahead. Consumption of oil has recovered strongly after crashing 9 percent last year, but the pandemic remains a concern in key oil consuming nations, including the United States.
With oil prices recovering, OPEC and its allies most likely saw little reason to reopen the agreement reached through long and difficult negotiations in July. That deal calls for gradual monthly output increases of 400,000 barrels per day well into next year.
OPEC Plus plans to meet each month to review the plan in case it needs adjusting.
A change of course might have encountered opposition, and it might have provided an opening for new negotiations on quotas from producers that would like higher ceilings — something that Prince Abdulaziz bin Salman, the Saudi oil minister, who leads these meetings, most likely wanted to avoid.
On the other hand, pressures to open the taps are growing. Signs of distress are emerging in the energy markets.
Already a global crunch in natural gas — a key fuel for generating electric power — threatens to affect oil prices. British consumers have faced several days of disruption because of a shortage of gasoline that is being blamed on a lack of fuel truck drivers.
Damage caused by Hurricane Ida in August to oil and gas infrastructure in the Gulf of Mexico has negated some of the impact of recent production increases by OPEC Plus.
A price jump to $90 a barrel or more might throw cold water on demand for oil and prompt a political backlash, including from the United States, some analysts say.
OPEC Plus could face louder calls for bigger increases at the group’s next meeting, which is scheduled for Nov. 4.