Oil prices extend sharp losses; OPEC+ output hike plan hits sentiment

Investing.com-- Oil prices fell Tuesday, extending the previous session’s losses, as reports that OPEC+ is preparing to raise production in November added to oversupply worries, while a U.S.-brokered plan to end the Gaza war cooled some geopolitical risk premiums.

At 08:30 ET (12:30 GMT), Brent Oil Futures expiring in November fell 1.7% to $65.94 per barrel, while West Texas Intermediate (WTI) crude futures slipped 1.8% to $62.30 per barrel.

Both benchmarks declined more than 3% on Monday, and remained on track to post losses in September.

OPEC+ looking at another hike in November

Market sentiment was weighed down by news that the OPEC+ alliance, led by Saudi Arabia and Russia, is considering another output hike of at least 137,000 barrels per day in November. 

The group will meet online on Oct. 5 to discuss the move. The increase would follow a similar supply boost already scheduled for October, signalling the group’s shift from deep cuts to measured production growth as members seek to protect market share.

“Our balance sheet clearly suggests additional supply isn’t needed. We expect the market to move into a large surplus in the fourth quarter and remain in surplus through 2026,” ING analysts said in a note.

“As a result, we expected oil prices to come under significant pressure over the course of next year,” they added.

Gaza peace framework pressures oil markets

Prices were also pressured by political developments in Washington, where U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu announced a 20-point plan aimed at ending the Gaza war. 

The framework, which Israel has accepted, includes an immediate ceasefire, the release of hostages, Hamas disarmament, and a transition to technocratic governance under international oversight. Hamas has yet to agree to the proposal.

While implementation faces major hurdles, the announcement helped reduce the war premium built into oil markets since the conflict began last year.

Adding to bearish sentiment, Iraq has resumed crude exports from the semi-autonomous Kurdistan region to Turkey over the weekend, ending an over two-year-long suspension.

China manufacturing PMI shrinks 

Official data on Tuesday showed that China’s manufacturing sector contracted for the sixth straight month in September, with activity in the services sector also showing signs of slowing.

However, a separate private survey painted a more optimistic picture, indicating stronger-than-expected growth in both manufacturing and services during the month.

Softening economic growth and subdued factory activity in the world’s second-largest economy also put downward pressure on oil.

Ayushman Ojha contributed to this article