Oil prices rose strongly Monday even though a group of eight oil-producing countries announced Sunday that they would be increasing supplies.
The countries, led by Saudi Arabia, said in a news release that they would increase production by 137,000 barrels a day, beginning in October.
Although the new planned increase amounts only to a fraction of a percent of global supply, it sends a strong signal that the producers have shifted to a new approach after restraining production in recent years.
Prices for Brent crude rose about 1.5% in trading on Monday to $66.52 a barrel on the Intercontinental Exchange.
The group of oil producers began gradually increasing output in April. Oil prices initially fell on fears of supply outstripping demand, but they have since stabilized even as the producers accelerated their increases.
“The thinking is that actually being bold has been a successful strategy so far this year,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm in London.
The eight countries, all members of the OPEC+ cartel, have completed unwinding one package of production trims. Now, they are starting to dismantle another that was agreed to in 2023.
In a news release Sunday, the countries, including Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, said the oil in the second package of cuts — 1.65 million barrels a day — “may be returned in part or in full subject to evolving market conditions.”
A third, 2-million-barrel-a-day set of cuts also remains on the books.
Of late, easing the output reductions has seemed to raise confidence in the oil market rather than hurt it.
Unwinding the first cuts “was a very bold step to take, but it has revealed a lot of information,” Paul Horsnell, an independent analyst and the chair of the board of governors of the Oxford Institute for Energy Studies, said on a recent podcast.
Among those insights is that there may be less capacity to increase oil production than previously thought, while demand for the fuel may be more resilient.
The multilayered deals between oil countries have become so complex that they may be confusing markets more than bolstering them, some analysts say, convincing the Saudis of the need to simplify their messaging.
In March, the Saudis and their allies decided to move ahead with increases despite the uncertainty about the global economy from President Donald Trump’s trade wars.
Staying in the good graces of Trump, who wants lower gasoline prices for American drivers, probably played a role in their calculations, analysts say.
One reason that prices have not collapsed is that the actual increases have turned out to be substantially less than the 2.5 million barrels a day announced.
Energy Aspects estimates that, for instance, the Saudi-led group is producing only about 1.7 million barrels a day more in September than it was in March.
That shortfall in new supply appears to have eased traders’ fears that millions of barrels of additional oil might flood the market.
As it turns out, most producers have struggled to increase production, helping the market absorb the increases.
The main beneficiary of the increases has been Saudi Arabia, which accounted for 70% of the additional crude production by the group from April to July, according to the International Energy Agency.
This article originally appeared in The New York Times.
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