Oil prices, oil stocks surge on OPEC+ move

Oil prices, oil stocks surge on OPEC+ move

SYDNEY/LONDON - Oil prices surged on Monday after Saudi Arabia and other OPEC+ producers announced a surprise cut in their output target, a move that rippled through stock markets, though the dollar failed to hold onto its early gains.

Brent crude futures looked set for its biggest daily percentage gain in around a year, jumping 5.77% to $84.52 a barrel on news OPEC+ would aim to cut output by around 1.16 million barrels per day. U.S. crude climbed 6.22% to $80.38.

Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024 following the oil output change, which was announced on Sunday, a day before a virtual meeting of an OPEC+ ministerial panel including Saudi Arabia and Russia.

"I think the alliance wants to make sure that (oil) surpluses don't extend into the second half of 2023, as they know that most of the economic weakness is going to come then," said Samy Chaar, chief economist at Lombard Odier.

"It's simply indicative of the global economy slowing, which is not necessarily bad news as it's mainly a self-inflicted slowdown caused by the U.S. and Europe to make sure that inflation is brought closer