Oil prices jump to 7-year highs after OPEC+ agrees to stick to gradual production hikes

• Oil prices spiked after OPEC+ agreed to keep its existing schedule of gradual hikes in oil production.
• WTI crude, the US oil benchmark, rose to its highest since 2014. Brent crude also gained.
• OPEC+ ignored growing calls for opening the taps at a faster rate to bring down prices.

Oil prices spiked after OPEC+ on Monday agreed to keep its existing schedule of gradual hikes in oil production, adding to inflationary pressures engulfing global markets.

West Texas Intermediate crude, the US oil benchmark, rose as much as 3% to $78.13 per barrel, its highest since 2014. Brent crude, oil's international benchmark, jumped as much as 3% to $81.77 per barrel.

The Organization of the Petroleum Exporting Countries as well as Russia and other non-member allies - also known as OPEC+ - ignored growing calls for opening the taps at a faster rate to bring down prices after oil rocketed to more than 50% this year.

Instead, the group "reconfirmed the production adjustment plan" to raise monthly overall production by 400,000 barrels per day in November, according to a statement released after the discussions.

In July, OPEC+ agreed to boost production by 400,000 barrels per day each month beginning August until at least April 2022, according to a statement. OPEC+ will meet again on November 4 to discuss the next monthly production quota.

The rapid ascent in oil prices comes amid a surge in demand for the commodity as major economies around the world simultaneously restarted after the devastation brought about by the pandemic lockdown. Bank of America last week said Brent crude could hit $100 a barrel for the first time since 2014, especially ahead of another cold winter.

Rather than increasing output by 400,000 barrels per day, adding 800,000 to the market in November would likely reflect the current market condition, according to Rob Thummel, portfolio manager at Tortoise, a firm that manages $8 billion in energy-linked assets.

But he acknowledged OPEC+ retains most of the leverage over the oil market. "OPEC+ holds all of the cards because they have available oil supply capacity that can be returned to the global markets in days."