OPEC and its allies, including Russia, have reportedly agreed to cut oil production by 1.2 million barrels per day sending oil prices climbing in the minutes after the reports began to circulate on Friday.
The news, reported by the Wall Street Journal, comes after a tumultuous day of negotiations on Thursday, after which Saudi Arabia’s oil minister Khalid Al-Falih said he was “not confident”. Oil was already up 4.5 percent within an hour after the news broke, with WTI climbing from $51.76 at opening to $53.77 at 14:41 am GMT. In the deal, 400,000 bpd will be cut by non-OPEC members and 800,000 bpd by OPEC members.
Reports from Thursday indicated Russia was not enthusiastic about the deal, and key producers, including Iran, were seeking exemptions from the production cuts.
OPEC’s Economic Commission Board had previously determined that the group would need to cut output by 1.3 million barrels per day to avoid a supply glut and to hopefully restore balance to supply and demand for next year, but reaching that number had become a sticking point in negotiations.