The OPEC+ group's surprise additional production cuts could push oil prices back towards $100 a barrel, tighten the market and encourage refiners to diversify supplies, analysts and traders said.
Oil prices jumped more than $4 a barrel on Monday after the Organization of the Petroleum Exporting Countries and their allies including Russia announced further production cuts of about 1.16 million barrels per day (bpd) from May through the rest of the year.
The pledges will bring the total volume of cuts by the group known as OPEC+ since November to 3.66 million bpd according to Reuters calculations, equal to 3.7% of global demand.
OPEC+ had been expected to hold output steady this year, having already cut by 2 million bpd in November 2022.
Rystad Energy said it believed the cuts will add to tightness in the oil market and lift prices above $100 a barrel for the rest of year, possibly taking Brent as high as $110 this summer.
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