The world’s leading oil nations – known as Opec – have struck a landmark deal
at talks in Algeria that sees the countries agree to cut output and lift prices.
Oversupply has been dogging the world’s oil markets and hopes are that the first deal between the nations since 2008 will mark the end of the ‘dumping’ strategy previously favoured by the organisation’s members.
Immediately after the deal was agreed oil prices rose, with Brent Crude – the international benchmark – rising almost 6 per cent to nearly $49 a barrel last night.
Iran’s Oil Minister Bijan Zanganeh said: ‘Opec made an exceptional decision today. After two and a half years, OPEC reached consensus to manage the market.’
He added: ‘We have decided to decrease the production around 700,000 barrels per day.’
Oil ministers said full details of the agreement would be finalised at a formal Opec meeting in November when an invitation to join cuts could also be extended to non-OPEC countries.
Markets now have to wait and see whether non-OPEC producers such as Russia, the United States and Canada will make cuts of their own.
The agreement sees output fall by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.
The deal is even more remarkable given that disagreements between Iran and its regional rival Saudi Arabia had thwarted earlier attempts to reach any agreement.
Analysts said the deal shows Opec – whose members account for around 40 per cent of global supply – has finally woken up to the reality of oversupply and the damage its policies has caused the oil industry.