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The oil prices across the global registered a surge of more than eight per cent as Organization of the Petroleum Exporting Countries (OPEC) on Wednesday agreed to cut 1.2 million barrels a day from its output to 32.5 million barrels, effective January. This was the first such cut by the organisation in last eight years. The decision was taken after tense talks by the OPEC oil cartel.
The cuts include Iraq reducing output by 200,000 bpd to 4.351 million bpd beginning in January. Kuwait, Venezuela and Algeria have agreed to monitor compliance with the OPEC agreement.
Non-OPEC member Russia has agreed to cut output by 300,000 bpd. OPEC will meet with non-OPEC producers on Dec. 9. U.S. West Texas Intermediate crude futures <CLc1 rose $4.02 to $49.25 a barrel, a 8.9 percent gain, by 11:24 a.m. (1624 GMT). WTI briefly traded at a high of $49.37 a barrel, a 9 percent gain.
Brent crude futures rose $3.79 to $50.17 a barrel, a 8.2 percent gain.
As OPEC ministers began their meeting, Khaled al-Falih, energy minister of the cartel’s biggest producer Saudi Arabia, sounded an upbeat note. “We don’t know (if a deal will be reached),” he said. “We will find out during the meeting. I think the sentiment generally is optimistic and positive.”
Before the meeting, Iraq’s Oil Minister Jabbar al-Luaibi said he was “very optimistic we’re going to come with very fruitful results…There will be a cut, yes, definitely,” Bloomberg News reported.