As markets re-opened for business in the early hours of Monday, oil prices and futures prices rose sharply in Oceania and Asia.
This could be a quick response to Sunday’s surprise announcement by Saudi Arabia, Iraq, and other Gulf states that they would reduce oil production further than previously planned.
Brent oil futures went up by $4.30 to $84.19 a barrel as new output would be cut by around 1.16 million barrels per day.
Similarly, the US West Texas Crude index climbed $4.88, to $80.55.
The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia.
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The Organization of Petroleum Exporting Countries (OPEC) called the production cut a “precautionary” move aimed at stabilising the market.
Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024.
Meanwhile, US equity futures were on the back foot and the dollar rose with Treasury yields, as a surprise production cut from OPEC+ drove oil prices about 5% higher.
It reverberated across asset classes as investors rushed to adjust for the risk that inflationary pressure may be more persistent than previously thought.
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The Norwegian krone was little changed after an earlier rally on the expected benefit to the Scandinavian country from higher energy prices.
The yen weakened amid concern over Japan’s dependence on oil imports and as confidence among the nation’s large manufacturers worsened, adding to the case for the central bank to maintain ultra-easy monetary settings for a while longer.
