Oil prices are stabilizing as traders weigh two key factors: OPEC+'s decision to implement a modest production increase and Saudi Aramco's reduction in crude oil pricing for Asian markets.

West Texas Intermediate (WTI) crude prices edged higher, breaking through $62 per barrel. Last week, the crude had fallen over 3% due to clear signs of production increases. The Organization of the Petroleum Exporting Countries (OPEC) and its partners, collectively known as OPEC+, decided to add 137,000 barrels per day of crude production in October—an increase lower than planned levels for the previous two months, prompting investors to reduce short positions.

However, Saudi Arabia announced on Monday that it would lower flagship crude prices for next month targeting its key market of Asia, signaling that Saudi Arabia, the de facto leader of OPEC+, believes market demand is continuously deteriorating. This development caused earlier crude price gains to narrow.

"The market had already priced in production increase expectations last week, and focus is now shifting to two aspects: whether inventory buildup will occur and what the reduction in spare capacity means for the future," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. "The current rally looks more like a 'relief bounce'—it may temporarily suppress bearish sentiment but will likely last only a day or two."

This OPEC+ production increase marks the formal reversal of production cuts originally planned to continue until the end of 2026. In recent months, the alliance has rapidly restored previously idle capacity, with this increase aimed at recapturing market share. However, the market widely expects actual production increases to fall short of announced figures: some member countries face pressure to abandon their production increases to compensate for previous overproduction, while others lack spare capacity.

At the beginning of last month, the International Energy Agency (IEA) predicted that global crude oversupply next year would reach record levels. Goldman Sachs Group Inc. expects this oversupply situation will drive Brent crude prices down to the lower end of the $50 per barrel range. Brent crude, the global oil benchmark, has already fallen over 10% this year, with President Donald Trump's tariff policies also pressuring energy demand prospects.

OPEC+ stated on Sunday that whether to restore the remaining 1.66 million barrels per day of production cuts will depend on "market condition changes," and implemented increases could also be reversed. In recent months, the alliance's pace of restoring idle capacity has exceeded expectations, surprising some crude market participants; however, overall prices have remained relatively stable since oil prices initially plummeted in April.

OPEC+'s decision has not pushed West Texas Intermediate crude beyond the $62 to $67 per barrel trading range of the past month.

"Saudi Arabia has regained control—they are the only country with spare capacity. The crude market is currently in a delicate balance between oversupply risks on one side and the threat of spare capacity depletion on the other," said Jeff Currie, Chief Strategy Officer for Energy Pathways at Carlyle Group, in an interview.

Earlier, reports indicated that the EU is exploring new sanctions on Russian banks and energy companies as one of the latest measures to end the Ukraine war, with the EU hoping to coordinate with the US on this matter. This news drove crude prices up 2.4% at one point.

Saudi Crown Prince Mohammed bin Salman's scheduled visit to Washington in November to meet with Trump suggests political considerations may also be behind OPEC+'s supply decisions. President Trump has repeatedly called for lower fuel prices to curb inflation.

Frederic Lasserre, Head of Global Research and Analysis at Gunvor Group, said at the Asia Pacific Petroleum Conference in Singapore on Monday that China's crude reserve purchases of approximately 200,000 barrels per day in recent months have provided some support to demand. However, he added that China may not be able to absorb all the upcoming market oversupply.