Oil Surges Past $85 as OPEC+ Extends Production Cuts Through Q2

Brent crude oil surged 3.2% to $85.40 per barrel on Monday after OPEC+ agreed over the weekend to extend its voluntary production cuts of 2.2 million barrels per day through at least June 2026. WTI crude rose 3.0% to $81.20.

The decision, led by Saudi Arabia and Russia, came as a surprise to some analysts who had expected the group to begin unwinding cuts in April. Saudi Energy Minister Prince Abdulaziz bin Salman emphasized in a statement that "market stability remains the top priority."

Market reaction:

• Brent crude: $85.40 (+3.2%)
• WTI crude: $81.20 (+3.0%)
• Energy stocks (XLE): +2.1%
• Gasoline futures: +2.8%

The decision tightens the supply-demand balance at a time when global oil demand is running at approximately 103.5 million barrels per day, near all-time highs. The International Energy Agency had forecast a supply surplus in H1 2026 assuming OPEC+ would begin tapering, but that assumption is now off the table.

US shale producers are unlikely to fill the gap, with the Baker Hughes rig count declining for the fifth consecutive week. US crude production has plateaued at approximately 13.2 million barrels per day.

Higher oil prices present a headwind for central banks fighting inflation and could complicate the ECB's easing path if energy costs feed through to consumer prices.