The group of major oil-producing countries known as OPEC+ has decided to keep its oil production targets unchanged for December, even as world oil prices climbed to their highest level in six months. The decision, taken at a meeting on Sunday, means the producers will not pump extra oil to bring prices down — at a time when war in the Middle East is already disrupting supplies.
On Friday, Brent crude — the benchmark, or reference price, used for much of the world’s oil — rose 2.4 percent to settle at $117.64 a barrel, after briefly touching $118. American oil, known as West Texas Intermediate, rose to $104.12 a barrel. It was the fourth month in a row that oil prices have risen.
Why prices are climbing
The main reason is the Strait of Hormuz, the narrow waterway between Iran and Oman through which about a fifth of the world’s crude oil and liquefied natural gas normally travels. Since fighting between the United States and Iran began on 28 February, the strait has been effectively shut to normal traffic, and attacks on commercial ships in and around it reached their highest monthly level of the war in October, with at least 35 attacks reported.
When traders fear that oil may not reach buyers safely, they add what experts call a “risk premium” — an extra amount on top of the normal price. That is what has pushed Brent from about $116.72 a barrel a week ago to $117.64 now. Diplomacy is continuing — Qatar is mediating between Iran and Washington, and Iran has confirmed receiving a letter from United States Vice President JD Vance — but no deal to reopen the strait has been announced yet.
What OPEC+ decided
OPEC+ is an alliance of oil exporters led by Saudi Arabia and Russia. Its seven core members — Saudi Arabia, Iraq, Kuwait, Oman, Algeria, Russia and Kazakhstan — agreed to maintain their September production levels for December, after reviewing global market conditions. The group will meet again on 29 November to review its policy.
In plain terms, the producers chose to wait rather than change course. They are watching the same two questions as everyone else: whether diplomacy reopens Hormuz, and whether fighting resumes after the American midterm elections on 3 November.
What it means for Pakistan
Pakistan imports most of the oil it uses, so a higher world price quickly becomes a bigger import bill. That puts pressure on the rupee, on the cost of petrol and diesel at home, and on prices generally, because transport costs feed into almost everything.
Readers should not expect relief next week. Until shipping through Hormuz returns to normal and a deal is actually signed and held, expensive oil is the working assumption. A genuine reopening of the strait could ease that pressure over time, but for now the honest picture is a high oil price with no quick fix.
Sources: Reuters, Bloomberg. Written in our own words for information only — not investment advice.