Oil spike as producers agree to cut production
VIENNA: Oil prices spiked yesterday as major oil producers, including the OPEC cartel, agreed to cut global oil production by 1.2 million barrels a day to reduce oversupply.
After days of meetings, the Organisation of the Petroleum Exporting Countries that includes the likes of Saudi Arabia and Iraq said it would cut 800,000 barrels a day for six months from January, though some countries such as Iran, which is facing wide-ranging sanctions from the US, have been given an exemption.
The rest will come from Russia and non-OPEC nations. The US, one of the biggest producers, is not part of the deal.
Oil producers have been under pressure to reduce production following a sharp fall in prices in recent months.
The price of oil has fallen about 25 per cent recently because major producers – including the US – are pumping oil at high rates.
The reduction met with the response hoped for by ministers as it was at the upper end of most predictions.
Following the announcement, Brent crude, the international standard, was up $US2.79 a barrel, or 4.7 per cent, at $US62.85.
Benchmark New York crude was $US2.11, or 4.1 per cent, higher at $US53.60 a barrel.