Oil prices jump in blow to global inflation hopes

Oil prices jump in blow to global inflation hopes

SYDNEY: Oil prices surged on Monday after Saudi Arabia and other OPEC+ producers announced a surprise round of output cuts, a potentially ominous sign for global inflation just days after a slowdown in U.S. price data had boosted market optimism.

Brent oil futures jumped $4.30 to $84.19 a barrel on news output would be cut by around 1.16 million barrels per day, while U.S. crude climbed $4.17 to $79.84.

The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia.

"The involvement of the largest OPEC+ members suggest that adherence to production cuts may be stronger than has been the case in the past," said Vivek Dhar, an energy analyst at CBA.

"That means that oil markets may potentially see around 1% of global oil supply or more being curtailed from May."

The latest reductions could lift oil prices by $10 per barrel, the head of investment firm Pickering Energy Partners said on Sunday.

Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024.

"Today's surprise cut is consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share," Goldman said.

"While