Oil prices continued their rally on Tuesday (September 9), driven by the latest smaller-than-anticipated increase in OPEC+ oil production, expectations that China will continue to hoard oil, and concerns over potential new sanctions against Russia.

The eight-member Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed on Sunday to increase production starting in October by 137,000 barrels per day, down from the roughly 550,000 barrels per day they made in September and August.

Brent crude rose 73 cents, or 1.1%, to $66.75 a barrel at 08:10 GMT, while U.S. West Texas Intermediate crude rose 58 cents, or 0.9%, to $62.84. "Oil prices are holding steady amid speculation that production will not rise by the amount authorized by the eight members, and furthermore, the fact that China, according to data, has already purchased around 0.5 million barrels per day for stockpiling," said Ole Hansen of Saxo Bank.

China's oil stockpiling, which has helped absorb this year's overproduction, is likely to continue at the same level into 2026, said the chief strategist at commodity trading firm Gunvor on Monday. Speculation about further sanctions against Russia after the country's largest airstrike in Ukraine set fire to a government building in Kyiv also supported prices. US President Donald Trump said he was ready to move to a second phase of restrictions.

The European Union's top sanctions official is in Washington with a team of experts to discuss what would be the first coordinated transatlantic action against Russia since Trump returned to office. Further sanctions against Russia would reduce its oil supply to global markets, which could push oil prices higher.

The US Federal Reserve's Federal Open Market Committee (FOMC) meets next week, and traders are pricing in an 89.4% chance of a quarter-point interest rate cut. Lower interest rates reduce consumer borrowing costs and can boost economic growth and oil demand. (alg)

Source: Reuters