Hong Kong/Atlanta CNN —
Oil prices surged during Asian trading on Monday after OPEC+ producers announced surprise cuts in production.
Brent crude, the global benchmark, rose 4.8% to $83.73 a barrel, while WTI, the US benchmark, rose 4.9% to $79.36.
Rising oil prices could mean inflation stays elevated for longer, adding pressure on a hot topic for consumers around the world.
On Sunday, Saudi Arabia announced that it would begin a “voluntary reduction” in its crude oil production along with other members or allies of the Organization of the Petroleum Exporting Countries (OPEC).
The cuts will begin in May and last through the end of the year, an official at the Saudi Energy Ministry was quoted as saying by Saudi state news agency SPA.
According to the SPA, the cuts come on top of cuts announced by OPEC+ in October.
This month, oil producers had agreed to cut production by 2 million barrels a day, the biggest cut since the pandemic began and about 2% of global oil demand.
Saudi Arabia now says it will cut oil production by another half a million barrels a day.
Meanwhile, Iraq will cut production by 200,000 barrels per day and the United Arab Emirates will cut production by 144,000 barrels per day.
Kuwait, Algeria and Oman will also reduce production by 128,000, 48,000 and 40,000 barrels per day, respectively.
In a Sunday note, Goldman Sachs analysts said the move was unexpected but “in line with the new OPEC+ doctrine of acting preemptively because they can without significant market share losses.”
The collective production cut by the nine members of OPEC+ amounts to 1.66 million barrels a day, said the analysts, who have upgraded their Brent price forecast to $95 a barrel this year.
The Ministry of Energy of Saudi Arabia described its latest reduction as a precautionary measure to support oil market stability, SPA said.
The White House has dismissed that notion — as have recent OPEC+ cuts.
“We don’t think cuts are advisable right now given the market uncertainty – and we’ve made that clear,” said a spokesman for the National Security Council. “We’re focused on pricing for American consumers, not barrels.”
Back in October, OPEC+’s decision to cut production had angered the White House.
US President Joe Biden promised at the time that Saudi Arabia would face “the consequences”. But so far his government appears to have backed away from its vows to punish the Middle East kingdom.
Russia, a member of OPEC+, also said Sunday it would extend a voluntary cut of 500,000 barrels a day until the end of 2023. The move was announced by Russian Deputy Prime Minister Alexander Novak, as quoted by state news agency TASS.
This decision was less surprising. Goldman analysts said they had forecast the cut would last into the second half of the year.
— CNN’s Hanna Ziady and Arlette Saenz contributed to this report.