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OPEC+ surprise output cuts lift oil prices by $5 per barrel

03 April 2023 09:25 (UTC +04:00)

Oil prices surged on Monday, jolted by a surprise announcement by OPEC+ to cut production further in what top producer Saudi Arabia called a precautionary measure to support market stability, APA-Economics reports citing Reuters.

Brent crude traded at $84.26 a barrel by 0347 GMT, up $4.37, or 5.5% after touching the highest in a month at $86.44 earlier in the session.

U.S. West Texas Intermediate crude was at $79.90 a barrel, up $4.23, or 5.6% after earlier hitting the highest level since late January.

The group known as OPEC+ had been expected to maintain its earlier decision to cut output by 2 million bpd until December at its monthly meeting on Monday.

As a result, Goldman Sachs lowered its end-2023 production forecast for OPEC+ by 1.1 million bpd and raised its Brent price forecasts to $95 and $100 a barrel for 2023 and 2024, respectively, its analysts said in a note.

Goldman estimated the output reduction could provide a 7% boost to oil prices, contributing to higher Saudi and OPEC+ oil revenues.