LONDON: Oil prices jumped more than 3% on Friday, hitting their highest levels in over a year after OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand.

Brent crude futures were up $2.23, or 3.3%, at $68.97 a barrel by 1441 GMT - a nearly 14-month high.

US West Texas Intermediate (WTI) crude futures climbed $2, or 3.1%, to $65.83 - the highest since April 2019.

Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.

"OPEC+ settled for a cautious approach ... opting to increase production by just 150,000 barrels per day (bpd) in April while market participants looked for an increase of 1.5 million bpd," said UBS oil analyst Giovanni Staunovo.

Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programmes around the globe.

Some forecasters revised their price expectations upward following the decision.

Goldman Sachs raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021.

However, analysts and traders have warned that slow physical crude sales and recovery for demand not predicted until around the third quarter suggest that the price rally is unwarranted.

"The market suggests a tightness that does not exist. Therefore, we continue to believe that the price risk is mainly downward and that the current price is overshooting," Hans van Cleef, senior energy economist at ABN Amro said.