Oil briefly moved above $65 a barrel after OPEC+ chose not to relax supply curbs even as the global economy pulls out of its pandemic-driven slump, confounding widespread expectations the group would loosen the taps. he surprise decision spurred a wave of crude price forecast upgrades by major banks. The producer alliance agreed to hold output steady in April, while Saudi Arabia said that it will maintain its 1 million barrel-a-day voluntary production cut. West Texas Intermediate rose as much as 1.9% and Brent briefly topped $68.

Crude has soared this year, shepherded higher by OPEC+ restraining supplies and the vaccine-aided recovery in consumption that’s drained inventories. The group’s decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported.

WTI extends rally to level not seen since January 2020

“Overall, this was the most bullish outcome we could have expected,” JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a note to clients.

Saudi Arabia’s bold and unexpected gamble to restrain production is founded upon its view that, this time around, higher prices will not lead to a big increase in output by American shale drillers. Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg News in an interview after the OPEC+ meeting that shale companies are now more focused on dividends.

PRICES:
  • West Texas Intermediate for April delivery advanced 1.1% to $64.64 a barrel at 8:28 a.m. in London.
  • Brent for May traded 1.3% higher at $67.58

Oil’s rapid gains this year stand to intensify the debate about the potential resurgence in inflation, and complicate the task facing the Federal Reserve as it supports the U.S. recovery. The Treasury market is already looking for signs of faster price gains, with yields rising rapidly. Crude is up more than 8% since Tuesday’s close despite a strengthening of the dollar and a steep sell-off in other major commodities, especially economic bellwether copper.

See also: Here’s What Top Banks Are Saying About the Saudi-Led Oil Shock

Goldman Sachs Group Inc. raised its Brent forecasts by $5 a barrel and now sees the global crude benchmark at $80 in the third quarter. JPMorgan increased its Brent projection by $2 to $3 a barrel and Australia & New Zealand Banking Group Ltd. boosted its three-month target to $70. Citigroup Inc. said crude prices could top $70 before the end of this month.