Oil prices climbed on Monday as investors welcomed the US Congress’s approval of a deal to suspend the government’s borrowing limit until 2025, easing fears of a default that could have triggered a global financial crisis. The deal also averted a partial government shutdown that would have disrupted economic activity.
The positive sentiment overshadowed concerns about the outcome of the upcoming OPEC+ meeting on Wednesday, where the group of oil-producing countries is expected to stick to its plan to gradually increase output amid recovering demand.
Brent crude, the global benchmark, was up 1.07% at $75.08 per barrel at 09:00 GMT, while US West Texas Intermediate (WTI) rose 1.02% to $70.82 per barrel. Both benchmarks had posted slight losses last week as investors anticipated the US debt ceiling decision.
The US debt ceiling is a legal limit on how much money the government can borrow to pay its bills, including interest on its debt, federal salaries, social security benefits, and tax refunds. The limit was reached in January, but the Treasury Department used emergency measures to keep paying its obligations until last week.
The deal reached by President Joe Biden and Republican House Speaker Kevin McCarthy will allow the government to borrow more money until after the next presidential election in November 2024, avoiding another political standoff over the issue.