The surprise cut in production could boost oil prices to $100 a barrel and beyond, analysts said. It comes after oil prices dipped last month, falling to $70 per barrel — the lowest in 15 months.
“It comes down to demand. If you believe … that demand is going to rebound in the second half of this year, and you believe that sanctions are going to hurt Russian production. Then these cuts if they stick with them are going to super tighten the market,” Bob McNally, president of Rapidan Energy group, said Monday.
“That would send oil prices well above $100 a barrel,” he told CNBC’s “Street Signs Asia, although he stressed there was “enormous downside risk” if demand decelerates due to macro problems.
Goldman in a Sunday note said it saw a 7% boost to oil prices as a result of the OPEC+ cut, raising its price forecast for Brent to $95 per barrel versus $90 previously.
“We expect these cuts to impact on prompt oil prices more than long-dated prices,” Citi said in a Monday note, adding that the sell-off in the sector over the past four to five months had seen many investors “neutralize their sector weighting.”
The resulting stocks have buy ratings from over 40% of analysts covering them, and average price target upside of at least 20%:
U.S.-based petroleum refiner PBF Energy received the highest potential upside from analysts, at 166.5%. The company is due to announce earnings on May 5.
Two stocks were notable for having buy ratings from all analysts covering them: Texas-based exploration company VAALCO Energy, as well as oil and gas producer W&T Offshore. Analysts also gave them both around 30% upside.
Oil and gas giant ExxonMobil made the list, getting 37% potential upside and a buy rating from 53% of analysts.
Goldman Sachs also recently recommended Exxon as a top pick, adding that it prefers the stock over rival Chevron.
American refining company Marathon Petroleum Corporation stood out for getting both a high buy rating and potential upside, with both coming in at more than 70%.
— CNBC’s Michael Bloom contributed to this report.