RIYADH: Oil prices surged on Monday, posting the biggest daily rise in nearly a year, after a surprise announcement by the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, to cut more production jolted markets.
Brent crude was trading at $84.39 a barrel at 12.10 p.m. Saudi time, up $4.50, or 5.63 percent, after touching the highest in a month at $86.44 earlier in the session.
US West Texas Intermediate crude was at $80.02 a barrel, also up about $4.35, or 5.75 percent, after hitting the highest level since late January.
On Sunday, OPEC+ announced that it is cutting the output by about 1.16 million barrels per day.
OPEC supply target cuts a preemptive measure, says J.P. Morgan
Brent oil prices could still end the year at $96 per barrel, J.P. Morgan analysts said, adding they view the surprise OPEC supply target cuts as a “preemptive measure” to assure that surpluses in the market do not extend into the second half of 2023.
J.P. Morgan further noted it had earlier assumed both the Biden administration and the producer group to act in the first quarter.
“The most surprising part of the announcement is that it was not made sooner,” J.P. Morgan analysts said in a note dated April 2, adding, “acting later diminishes the impact on overall balances, and hence it takes longer for the price impact to take hold.”
Earlier, Goldman Sachs raised its Brent price forecast for December 2023 by $5 to $95 a barrel and December 2024 by $3 to $100 per barrel.
