SINGAPORE/SEOUL: The OPEC+ group’s surprise additional production cuts could push oil prices back toward $100 a barrel, tighten the market and encourage refiners to diversify supplies, analysts and traders said.

Oil prices jumped more than $4 a barrel on Monday after the Organization of the Petroleum Exporting Countries and their allies including Russia announced further production cuts of about 1.16 million barrels per day from May through the rest of the year.

The pledges will bring the total volume of cuts by the group known as OPEC+ since November to 3.66 million bpd according to Reuters calculations, equal to 3.7 percent of the global demand.

OPEC+ had been expected to hold output steady this year, having already cut by 2 million bpd in November 2022.

Rystad Energy said it believed the cuts will add to tightness in the oil market and lift prices above $100 a barrel for the rest of year, possibly taking Brent as high as $110 this summer.

UBS also expects Brent to reach $100 by June, while Goldman Sachs raised its December forecast by $5 to $95.

Goldman said strategic petroleum reserve releases in the US and in France, due to ongoing strikes, as well as Washington’s refusal to refill its SPR in the 2023 fiscal year, may have prompted the OPEC+ action.

An official at a South Korean refiner said the cut was “bad news” for oil buyers and OPEC was seeking to “protect their profit” against concerns of a global economic slowdown.

The supply cut would drive up prices just as weakening economies depress fuel demand and prices, squeezing refiners’ profits, the South Korean refining official and a Chinese trader said.

Both declined to be identified as they were not authorized to speak to media.

Saudi Arabia said its voluntary output cut was a precautionary measure aimed at supporting market stability.

Purchases by China, the world’s top crude importer, are expected to hit a record in 2023 as it recovers from the COVID-19 pandemic, while consumption from No.3 importer India remains robust, traders said.