The Organisation of the Petroleum Exporting Countries, OPEC, for the first time in eight years reached an agreement to cut crude output to help ease a global glut, a development that sent oil prices through the roof on Wednesday, September 28.
Brent crude leapt 5.9pc to $48.69 a barrel this evening and West Texas Intermediate jumped 5.3pc to $47.05 as news filtered out from the Opec meeting in Algeria that an agreement had been reached to reduce output to a range of between 32.5m barrels per day (bpd) to 33m bpd, down from the current rate of about 33.24m bpd, The Telegraph reports.
The deal to cut production also lifted US energy stocks on Wall Street, with shares in Exxon Mobil climbing 4.4pc and Chevron rising 3.2pc, gains that helped to send the Dow Jones Industrial Average 0.6pc higher to 18,339.24.
The 14-nation Opec cartel, which supplies almost 40pc of the world’s crude, will iron out the details of each country’s specific production limits at the next Opec meeting in November in Vienna. It also plans ask other oil producing countries that are not part of the cartel to help tackle the worldwide oversupply of crude.
The deal is an important boost for the energy companies around the world, which have been hit hard by the oil price rout. The crude glut has sent the price of brent tumbling from a peak of $115 a barrel in June 2014 to as low as $27.88 in January, exerting huge pressure on the energy industry.
The output cut, which was agreed behind closed doors in a four-and-a-half hour meeting in Algiers, also marks a significant shift in relations between Saudi Arabia, which is Opec’s biggest producer and effectively its leader, and Iran.
