Opec holds steady as oil prices climb

[WORLD] Oil prices rose over 1% on Wednesday following Opec+’s decision to maintain its current output policy, defying earlier investor expectations of a production increase. Brent crude settled at $64.90 per barrel, while US West Texas Intermediate (WTI) closed at $61.84. This price boost was further fueled by the US government’s decision to bar Chevron from exporting Venezuelan crude, tightening global supply.

Opec+, which includes the Organization of the Petroleum Exporting Countries and allied producers, also announced plans to create a framework for setting 2027 production baselines. Analysts noted that most member nations lack flexibility to significantly adjust output in the short term. Market watchers are eyeing a smaller upcoming meeting of eight Opec+ members on Saturday, which may determine whether to increase production in July.

Additional factors tightening supply include the summer driving season’s expected demand surge, flat non-Opec+ crude output, and risks from Canadian wildfires. Meanwhile, Chevron has ended key operating contracts in Venezuela but will keep its staff on the ground. Analysts believe prices could also rise if there’s progress in US-Iran negotiations or broader global trade talks. US crude inventories have already fallen by over 4 million barrels, with official government figures awaited.

Implications

For businesses, particularly those in energy-intensive industries, these price moves could signal rising input costs ahead of the high-demand summer season. Companies reliant on fuel for transportation, manufacturing, or logistics may face slimmer margins if oil prices remain elevated or climb further due to supply constraints. Energy producers, meanwhile, might benefit from the price bump, though they also face uncertainty around future Opec+ decisions and regulatory changes.

For consumers, the immediate risk is higher fuel and transportation costs, especially as summer travel ramps up. Gasoline prices often lag behind crude prices, but a sustained increase could hit household budgets, particularly in countries like the US where driving peaks during this season. Airline tickets, shipping fees, and other oil-sensitive costs may also rise if the supply tightness persists.

In terms of public policy, the Chevron-Venezuela development adds a geopolitical layer, limiting the flexibility of US policymakers who have been trying to balance domestic energy security with foreign policy objectives. Any progress in US-Iran talks could act as a counterweight, potentially easing some supply pressures if Iranian crude returns to global markets. Additionally, policymakers will need to monitor how price volatility affects inflation trends and whether intervention or strategic reserves might be needed.

What We Think

This latest oil market movement underscores just how tightly intertwined global energy markets are with politics and policy shifts. While Opec+ holding steady on output may calm some investor nerves, the lack of short-term flexibility among members means any supply shock — whether from natural disasters or geopolitical flare-ups — can ripple quickly into prices. “They were hoping to slow the pace of production increases and stop the slide in price. But that's not the way it panned out,” as Mizuho’s Bob Yawger put it.

The US move to block Venezuelan crude exports adds another twist, reducing potential supply sources just as summer demand heats up. Meanwhile, optimism around US-Iran negotiations, if realized, could introduce much-needed barrels into the system — but that’s a big “if.”

We think businesses and consumers should brace for a potentially volatile summer in oil markets, with prices vulnerable to both policy moves and unexpected disruptions. It’s also a sharp reminder for governments that energy security isn’t just about domestic production; it’s also about managing international relationships and anticipating how global supply chains interact. For now, all eyes are on Opec+’s weekend meeting — and whether it delivers a production change or stays the cautious course.