Oil up amid OPEC+ output cut extension, cease-fire talks in Middle East

By Zeynep Beyza Kilic

Oil prices increased on Monday amid an OPEC+ decision to continue production cuts until the end of June and call for a cease-fire between Israel and Hamas.

International benchmark Brent crude traded at $83.78 per barrel at 10.53 a.m. local time (0753 GMT) for a 0.28% increase from the closing price of $83.55 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $80.09 per barrel at the same time, for a 0.15% rise after the previous session closed at $79.97 per barrel.

Several big producers in the OPEC+ group, including Saudi Arabia and Russia, agreed to extend their voluntary crude supply cuts until the end of June.

Saudi Arabia and Russia will cut daily output by 1 million barrels and 471,000 barrels, respectively, while Iraq and the UAE will reduce daily production by 220,000 barrels and 163,000 barrels, respectively.

At the end of June, the countries will reevaluate their output cuts and could change their output level according to market conditions, OPEC announced.

Meanwhile, escalating geopolitical tensions in the Red Sea and the Middle East continue to support higher oil prices but the possibility of a cease-fire limits price increase.

Cease-fire talks will be held in Egypt this week. Delegations from Hamas, Qatar, and the US arrived in Cairo to resume a new round of negotiations on Sunday.

US Vice President Kamala Harris called for an immediate cease-fire in Gaza over the weekend. "And given the immense scale of suffering in Gaza, there must be an immediate cease-fire for at least the next six weeks, which is what is currently on the table," Harris said.

Intensive efforts are ongoing to reach a deal before the Muslim fasting month of Ramadan, which begins in early March, a high-ranking Egyptian source told Egyptian Cairo News Channel.

Expectations that high interest rates in the US, the world's biggest oil consumer, could lower oil demand put downward pressure on oil prices.

Following economic data announced in the US last week, expectations that the US Federal Reserve Fed will start interest rate cuts in the first half of the year strengthened.

Analysts believe this week's macroeconomic data in the US will give clues about the bank's future decisions. Experts will closely follow Fed Chairman Jerome Powell's statements to Congress this week.