OPEC agreement leads to oil price surge

Reports of an agreement among the members of the Organisation of the Petroleum Exporting Countries (OPEC) to cut oil production has led to a dramatic surge of 5 per cent in the price of oil, with knock-on effects on international markets.

The cartel, which met Wednesday in Algiers, as agreed to cut production from 33.4 million barrels of oil per day (bpd) to 32.5 million, with Saudi Arabia – the world’s biggest producer – accepting a cut of 350,000 bpd. OPEC members Iran, Nigeria and Libya are all exempt from the deal.

Since they reached a relative peak in price of $100 a barrel in mid-2014 prices have been extremely volatile, dropping to $26 a barrel earlier this year.

Petrocurrencies rally following report of OPEC dealhttps://t.co/0yq6wFo0Hi

— Business Insider (@businessinsider) September 28, 2016

Analysts have suggested that OPEC members had pursued a strategy of maintaining high production in order to keep control of their share of the market, in the face of new competition in the form of fracking and shale oil.