Oil prices decline due to OPEC+ decision, manufacturing indicators faltering, and rising dollar

Global oil prices fell on Tuesday, November 4, influenced by a number of factors, most notably the OPEC+ alliance's decision to suspend plans to increase production during the first quarter of next year, alongside weak economic indicators and a rising US dollar.

This decline came after Brent crude recorded a drop of 76 cents to reach $64.13 per barrel, while West Texas Intermediate crude fell by 81 cents to settle at $60.24 per barrel.

Recent market movements reflect a growing concern about global oil demand, especially after the release of purchasing managers' index data in the manufacturing sector in Asia and the United States, all of which came in below expectations.

Analyst at PVM, John Evans, pointed out that these indicators represent a real concern for the markets, stating: "The continuous appearance of weak purchasing managers' index indicators in the manufacturing sectors in Asia followed by the US Institute for Supply Management index is a concern for oil demand. The threat of tariffs also pressures the market." He added that the rising dollar is an additional factor putting pressure on prices, explaining: "The rise of the dollar represents another dampening factor for oil prices at the moment, and we expect a gradual decline in prices currently."

The OPEC+ decision made last Sunday called for a limited increase in production for December, with any additional increases suspended during the first quarter of next year. This decision comes after the alliance raised production targets since April by about 2.9 million barrels per day, equivalent to 2.7% of global supply, before slowing the pace of increases starting in October amid expectations of a market surplus.

In a research note, Bank of America considered that this trend reflects the alliance's awareness of the risks of oversupply, stating: "This decision clearly indicates that OPEC+ is aware of the risks of oversupply, and it seems that it does not want to push prices sharply below $50 per barrel. We expect investors to view this potential price level positively."

Despite these concerns, several major energy producers in Europe have questioned the likelihood of an oversupply occurring next year, pointing to increased demand and reduced production. US Deputy Secretary of Energy, James Danly, expressed his disbelief in the existence of an oil surplus in 2026.

Sources within the OPEC+ alliance revealed that the decision to keep production targets unchanged during the first quarter came as a result of pressure from Russia, which is facing difficulties in increasing its exports due to the Western sanctions imposed on it.