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Brent crude was trading at $84.22 a barrel by 0900 GMT, up
$4.33, or 5.4%, after touching the highest in a month at $86.44
earlier in the session.
U.S. West Texas Intermediate crude was at $79.84 a barrel, up
$4.17, or 5.5%, after earlier hitting the highest level since
late January.
The Organization of the Petroleum Exporting Countries and their
allies including Russia shook markets by announcing further
production cuts of about 1.16 million barrels per day (bpd) on
Sunday.
The group, known as OPEC+, had been expected to maintain its
earlier decision to cut output by 2 million bpd until December
at its monthly meeting on Monday.
The pledges bring the total volume of cuts by OPEC+ to 3.66
million bpd according to Reuters calculations, equal to 3.7% of
global demand.
As a result, Goldman Sachs lowered its end-2023 production
forecast for OPEC+ by 1.1 million bpd and raised its Brent price
forecasts to $95 and $100 a barrel for 2023 and 2024,
respectively, it said in a note.
The Biden administration said the move announced by the
producers was unadvisable and some analysts questioned OPEC+'s
rationale for the extra production cut.
"It's hard to buy the 'pre-emptive' and 'precautionary'
reasoning - especially now, when the banking crisis had tailed
off and Brent had crawled back up towards $80 from its 15-month
lows earlier in March," said Vandana Hari, founder of oil market
analysis provider Vanda Insights.
The decision may mean OPEC+ still sees economic storm clouds on
the horizon, Jorge Leon, senior vice president at consultancy
Rystad Energy, said.
"These cuts may be signaling that OPEC+ believes that there are
enough recessionary indicators in the market ... (and) will
further tighten the oil market for the rest of the year and
could push prices above $100 per barrel".
Brent fell last month towards $70 a barrel, the lowest in 15
months, on concerns that a global banking crisis and rising
interest rates would hit demand despite lower OPEC oil output in
March due to a halt in some of Iraq's exports.
(Reporting by Mohi Narayan in New Delhi and Florence Tan in
Singapore; Editing by Jamie Freed and Kirsten Donovan)
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