Oil prices moved sharply higher on Tuesday, lifting the futures contract to a 10-month closing high.
With traders betting on a likely shortfall in supply following the recent decision by Saudi Arabia and Russia to extend their voluntary output cuts to the end of the year, oil prices surged higher today.
Also, the monthly report from the Organization of the Petroleum Exporting Countries (OPEC) showed the oil market is going to be a lot tighter than initially thought.
OPEC now expects a 3.3 million barrels a day deficit over the next 3 months, which is one million more bpd of a deficit than some energy traders were anticipating.
Worries about fresh disruption from powerful storms and floods in eastern Libya contributed as well to the rise in oil prices.
Four major oil ports in Libya - Ras Lanuf, Zueitina, Brega and Es Sidra - were closed from Saturday evening for three days, due to flooding and a storm, which killed about 2,000 people.
West Texas Intermediate Crude oil futures for October ended higher by $1.55 or about 1.8% at $88.84 a barrel, the highest settlement for a front-month contract since early November, 2022.
Brent crude futures settled at $92.06 a barrel today, gaining $1.42 or about 1.6%, after hitting a high of $92.39 a barrel earlier in the day, the highest since November 2022.
"The oil market could get even tighter if the data starts to improve for Europe or China, which means we could easily see Brent crude make a run towards the $100 a barrel level," says Edward Moya, Senior Market Analyst at OANDA.
OPEC says in its report that major economies are expected to do better than expected despite signs that global inflation was surging again from crude prices nearing triple digits. OPEC's monthly report forecast world oil demand will rise by 2.25 million barrels per day in 2024.
Traders now await weekly oil reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). The API's report is due later today, while the EIA's inventory data is due Wednesday morning.
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Market Analysis
December 19, 2025 15:10 ET U.S. inflation data and interest rate decisions by major central banks were the highlights of this busy week for economics news flow. Employment data and survey results on the housing markets also gained attention in the U.S. In Europe, the European Central Bank and Bank of England announced their policy decisions and macroeconomic projections.