Thanks to good news on the demand and supply side, oil futures jumped on Monday.
The Organization of the Petroleum Exporting Countries and its allies said on Sunday that they would stick to their target of cutting oil production by 2 million barrels per day from November through to the end of the century.
The production cut is equivalent to 2% of the world's demand.
The decision was made due to the uncertainty surrounding the global economic and oil market outlooks. The US was upset by the move and the White House accused the OPEC+ of being involved with Russia. That's because tighter oil supply tends to drive up prices, which may help prop up Russia's war chest despite sanctions and boycotts.
The move was driven by market considerations according to the organization.
US West Texas Intermediate oil futures were higher at 10.46pm. International crude oil futures were 1.1% higher at $86.47 a barrel, after jumping as much as 2.5% earlier in the day.
Market sentiment is boosted by hopes of China's economic reopening from the Pandemic.
The country's top Covid official appeared to tone down the country's hardline Covid-zero approach last week. The Covid testing rules were relaxed in several Chinese cities.
Although they do not point to a quick reopening for the entire country, the events point to the beginning of the end of zero- Covid in China. Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a Monday note that there was optimism around the relaxation of Covid restrictions.
Two days after the European Union and the G7 agreed on a $60 a barrel price cap for Russian crude oil, the Organization of the Petroleum Exporting Countries decided to keep production at current levels.
If Russia can't find enough dark ships to export crude covertly, prices could go up to $120 a barrel next year, according to analysts at Bernstein. There is a price limit on Russian crude.
The price cap will not be accepted by Moscow, according to the Kremlin's spokesman.
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