Price hike comes after news that oil producers will cut production by about 1.16 million barrels per day.
Oil prices have risen after Saudi Arabia and other OPEC+ producers announced a surprise round of production cuts, a potentially ominous sign for global inflation, just days after a slowdown in US price data fueled market optimism.
Brent oil futures rose $4.30 to $84.19 a barrel on news output would be cut by about 1.16 million barrels a day, while US crude rose $4.17 to $79.84.
The change comes ahead of a virtual meeting of an OPEC+ ministerial panel, including Saudi Arabia and Russia.
“The involvement of the largest OPEC+ members suggests that compliance with production constraints may be stronger than in the past,” said Vivek Dhar, an energy analyst at CBA.
“That means oil markets may be curtailed about 1 percent of global oil supply or more from May.”
The latest cuts could push oil prices up by $10 a barrel, the head of investment firm Pickering Energy Partners said Sunday.
Goldman Sachs raised its forecast for Brent to $95 a barrel by the end of the year and to $100 by 2024.
“Today’s surprise cut is consistent with the new OPEC+ doctrine of preemptive action because they can do so without significant loss of market share,” said Goldman Sachs.
“While surprising, this reduction reflects important economic and likely political considerations.”
The sharp rise in energy costs somewhat overshadowed Friday’s slower reading for US core inflation, which led Wall Street to finish the month strong. Central banks in Australia and New Zealand are holding policy meetings this week, the latter of which are expected to rise another quarter point to 5 percent.
Markets are betting that the Reserve Bank of Australia (RBA) will pause its tightening campaign after 10 consecutive rises, though analysts are more divided on whether it will continue to rise.