Oil prices rise more than 7% after Opec deal to lower production

Oil prices have soared after the Organisation of the Petroleum Exporting Countries (Opec) secured a deal to cut production for the first time in eight years.

Brent crude prices were up more than 7% to 50.87 US dollars a barrel after Opec said it had reached an agreement to curb supply.

The cartel said it would reduce production by around 1.2 million barrels a day to a total production of 32.5 million barrels per days from January 1, 2017.

Opec president Mohammed bin Saleh al-Sada said it had reached a deal which would support the "general well being and health of the world economy".

"With the cooperation of and understanding of all member countries we have been able to reach an agreement," he said.

He added that the cartel had considered the need to encourage investment in oil production and secure the long-term security of supply.

The deal depends on non-Opec members agreeing to cut their output by 600,000 barrels a day, Mr Al-Sada said.

He added that Russia - a non-Opec member - had already thrown its weight behind efforts to tackle the growing global supply glut by stating it would slash its production by 300,000 barrels a day.

But Indonesia had suspended its membership of the organisation because it could not agree to the terms of the deal.

Mr Al-Sada confirmed that Saudi Arabia - the biggest Opec producer - would take the lion's share of the cut, agreeing to trim 486,000 barrels from its production of more than 10 million barrels a day.

Brent crude prices have fallen nearly 50% since their peak of around 100 US dollars a barrel in June 2014.

The slide in prices has delivered cheaper petrol at the pumps for motorists, but hammered the financial performance of blue-chip energy companies.

However, even a full Opec cut is unlikely to restore crude prices to the levels seen two years ago, before increased output from the US and other non-Opec countries led to oversupply.

Oil majors were leading the charge on the London Stock Exchange, as the price of Brent crude rose following the announcement.

Royal Dutch Shell B was the biggest riser on the London market, up more than 4%, while rival BP jumped 3% higher.

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

Windows 10 is to let users choose between longer battery life and better performance

HSBC to close 62 branches in the UK in 2017

Pound 'under some selling pressure' following Brexit ruling

Snapchat adds search as the photo app undergoes a big redesign


Today's Stories

Dollar falls as investors eye Donald Trump's protectionist plan

Credit unions hope to boost new mortgage lending

Given all the risks, sterling could fall back to 90 pence

Samsung to delay new phone launch

Lifestyle

Making cents: Shopping around is still the best way to save some cash

Reframing Michael Collins in The Big Fellow

It's been a long and winding road for music group Fairport Convention

We’ll have to shout ‘stop’ to non-bio plastics, or else...

More From The Irish Examiner