Oil Prices Stable despite OPEC+ Output cuts

Oil prices remained stable on Dec 5, despite uncertainty over OPEC+'s voluntary output cuts and continued Middle East tensions. By 0106 GMT, Brent crude futures were up 13 cents to $78.16 per barrel, while West Texas Intermediate crude futures were up 18 cents to $73.22 per barrel.

Oil prices fell in the previous trading session as traders questioned whether OPEC+ supply cuts would have a significant impact, and as a stronger US dollar weighed on commodity prices in general, according to CMC Markets analyst Tina Teng. A stronger dollar typically raises the price of oil for holders of other currencies, potentially dampening demand.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, on Thursday agreed to voluntary output cuts totalling about 2.2 million barrels per day (bpd) for the first quarter of 2024, led by Saudi Arabia rolling over its current voluntary cut. At least 1.3 million bpd of those cuts, however, were an extension of voluntary curbs that Saudi Arabia and Russia already had in place.

Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, told Bloomberg on Dec 4 that OPEC+ production cuts can "absolutely" be extended beyond the first quarter if necessary. However, the resumption of fighting in the Israel-Hamas conflict, as well as attacks on three commercial vessels in international waters in the southern Red Sea, heightened supply concerns.

These incidents came after a string of attacks in Middle Eastern waters since Israel and the Palestinian militant group Hamas declared war on each other on Oct. 7.