Following speculations of possible additional oil production cut by the Organisation of Petroleum Exporting Countries (OPEC), Brent crude oil, against which Nigerian oil is priced, rose by 0.7 per cent to $81.18 a barrel while U.S. West Texas Intermediate crude saw a similar increase to $76.40 a barrel. The positive momentum follows a four-week decline in prices driven by reduced concerns over Middle East supply disruptions caused by the ongoing Israel-Hamas conflict.

Crude oil prices soared this week on mounting expectations that the Organization of Petroleum Exporting Countries (OPEC) and its allies will deepen voluntary production cuts.

Both Brent crude and West Texas Intermediate shot up in mid-morning trade in Asia today, with Brent crude spiking above $81 per barrel, where it climbed on Friday, and WTI breaching the $76 mark.

OPEC+ members are convening next Sunday to hash out production policy, with Reuters reporting from three unnamed sources within the cartel that OPEC+ will explore further production cuts. This discussion comes after a four-week skid for oil as the war premium from the conflict between Israel and Hamas waned.

Goldman Sachs analysts told Reuters “Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in time spreads, and higher-than-expected inventories.

Initial projections of a tight oil balance for the rest of the year have loosened, ING analysts Warren Patterson and Ewa Manthey observed on Friday. An unexpected surge in supply has eroded a significant portion of the anticipated deficit for the fourth quarter of 2023. As a result, the market is still expected to swing into a surplus in the first quarter of 2024.

However, amidst this shifting landscape, Bloomberg quoted Patterson as saying in a recent note that ING anticipates Saudi Arabia and Russia to deepen their production cuts.

“However, the extent to which the broader OPEC+ group will make further cuts remains uncertain,” Patterson added.

If other OPEC+ members join the production cuts, the projected surplus for the first quarter of next year could evaporate, the ING researchers noted. While the likelihood of broader cuts by other OPEC+ members remains unclear for now, the possibility is certainly on the table, especially given the recent 20 percent slump in oil prices since late September.