Oil prices surged on Monday morning, after the Organization of the Petroleum Exporting Countries and its allies – known as OPEC+ – announced an increase to output for July that was in line with expectations.
Brent crude futures (BZ=F) jumped 2.6% to $64.39 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) were up 3% at $62.63 a barrel.
OPEC+ said in a statement on Saturday that its eight participating countries had agreed to increase output by 411,000 barrels per day.
Jim Reid, a market strategist at Deutsche Bank, said: “An increase of this magnitude was flagged on the wires on Friday afternoon and there was some prospect of it being higher than this.
He said that oil futures were higher on Monday morning “in a relief that the output increase wasn't higher.”
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ING's head of commodities strategy, Warren Patterson, and commodities strategist Ewa Manthey said: “The latest increase is in line with our expectations. We’re also assuming that OPEC+ will continue with these large supply hikes.
“Rising tensions between Russia and Ukraine added further support to the market this morning. Ukraine carried out large-scale drone attacks on several Russian airfields, which comes ahead of peace talks between Russia and Ukraine this week. In addition, some US senators are pushing for harder sanctions against Russia, with a proposal to impose 500% tariffs on imports from countries that buy Russian oil.
“While president Trump appears to be increasingly frustrated with president Putin, he’s so far been reluctant to impose additional sanctions. Actions that successfully target Russian oil flows will change the outlook for the oil market drastically.”
Gold prices also jumped on Monday morning, as the latest escalation in the Russia-Ukraine conflict and tariff concerns helped drive demand for the precious metal as a safe-haven investment.
Gold futures (GC=F) were up 1.9% at $3,379.50 per ounce at the time of writing, while the spot gold price climbed 1.9% to $3,352.32 per ounce.
Investors have been flocking to the yellow metal as it is considered to act as a hedge in times of political and economic uncertainty.
On Friday evening, US president Donald Trump announced that tariffs on imports of steel and aluminium would be doubled to 50% on Wednesday.
Deutsche Bank's Reid said: “It is really hard to keep up or predict what's going to happen on trade at the moment, and that's before we factor in the full ramifications from the court ruling last Thursday night, and then the subsequent brief stay of execution for them on appeal.”
