Oil prices have experienced a sharp rise after the OPEC+ alliance announced 1.66 million barrels of daily production cuts. The cuts, which will take effect in May, are being shared among a number of producing countries, including Saudi Arabia and Russia, who have agreed to reduce their pumping by 500,000 barrels per day each.

The Joint Ministerial Supervision Committee (JMMC) of the alliance held a teleconference on Monday to reach an agreement on the production cuts. The cuts are in addition to a reduction of 0.5 mbd previously announced by Russia, which has now been extended until the end of the year. The group of 23 countries also adopted a sharp cut of 2 mbd in October 2022.

The announcement of the cuts sent oil prices soaring, with a barrel of Brent crude, the main international benchmark, touching $84 after registering a rise of 5.2%. The Kremlin defended the cuts, saying they were an “important measure” to guarantee investments in the sector.

Experts say the cuts could help stabilize markets, but that they may not be enough to significantly reduce global inventories. They also warn that the cuts could cause a shortage in supply and a further spike in prices.