HG MARKETS:

The oil market is currently focused on the upcoming decision by the eight OPEC+ countries that have voluntarily reduced their production. Media reports suggest that some delegates are leaning toward a substantial production increase, which has already exerted downward pressure on oil prices. Given this, the actual announcement may have only a muted effect on the market—unless it signals larger-than-expected output hikes or hints at sustained increases in the months ahead. According to a commodity researcher, oil prices would likely face more significant pressure only if such aggressive production expansions materialize.

Despite the speculation, OPEC+ has shown a pattern of avoiding firm pre-meeting commitments in recent months. This approach may be intended to give certain members, notably Kazakhstan, time to correct prior overproduction. The bloc’s leadership, particularly Saudi Arabia, appears to have stepped in by boosting output more than initially planned to help offset these compliance issues and maintain overall market balance.

Meanwhile, geopolitical factors are providing some support to oil prices. The U.S. government has extended a license for an American company to operate in Venezuela, although with strict limitations. The renewed license permits minimal production but prohibits any oil exports, disappointing market participants who had expected a more comprehensive renewal that included export permissions.

Adding to the geopolitical complexities, U.S. President Trump recently condemned Russian President Putin for renewed aggression in Ukraine and issued threats of new sanctions. These prospective sanctions are expected to target Russia’s energy sector, raising concerns over further disruptions to global oil supplies. The threat of expanded sanctions has heightened market tensions and added a bullish undertone to oil prices.

These geopolitical developments have significantly reduced expectations for a near-term easing of global energy sanctions. Just weeks ago, a relaxation of some restrictions had seemed plausible, but the current climate suggests otherwise. As a result, geopolitical risks continue to act as a counterbalance to the bearish pressure from potential OPEC+ production increases, keeping oil prices in a state of uncertainty.