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 $3.94 to $83.83 a barrel on news output would be cut by around 1.16 million barrels per day. U.S. crude climbed $3.84 to $79.51, but was off its early peak of $81.69.
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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 suggests 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."
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