BENGALURU: Oil benchmarks jumped 6 percent on Monday, the day after the OPEC+ group jolted markets with plans to cut more production, raising fears of tightening supplies while some warned of reduced demand if oil refiners flinch at paying higher prices for crude.

Brent crude settled higher by $5.04, or 6.3%, at $84.93 a barrel, after touching its highest since March 7 at $86.44. West Texas Intermediate crude settled up by $4.75, or 6.3%, at $80.42 a barrel after rising to a two-month high during the session.

The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, shook markets with Sunday’s announcement that it will lower its production target by a further 1.16 million barrels per day (bpd).

The latest pledges bring the total volume of cuts by OPEC+ to 3.66 million bpd including a 2 million barrel cut last October, according to Reuters calculations, equal to about 3.7% of global demand.

US President Joe Biden’s administration said it was given a “heads up” on the production cut and told Saudi officials that it disagreed with it.

OPEC had described the cuts as precautionary. Analysts said a weakening economy and rising oil stockpiles supported the decision. Last month, Brent prices had traded near $70 a barrel, a 15-month low, on fears of weakening demand.

Since mid-December, US crude oil inventories have risen fairly steadily and hit their highest level in two years in the week ended March 17. Western sanctions on Russia also have led to a sizeable number of Russian crude cargoes looking for a home, Mizuho analyst Bob Yawger said.—Reuters