Oil spikes on reported OPEC deal

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BRENT crude futures spiked 8% after OPEC reportedly agreed to its first limit on oil output since 2008, after Saudi Arabia said it was prepared to accept “a big hit” on production in a deal which saw arch-rival Iran also conceding by agreeing to restrict output at pre-sanctions levels.
Oil prices surged on speculation, reported by among others, global news agency Reuters, that a compromise deal between Saudi Arabia and Iran had finally been brokered and that OPEC had ratified an agreement made in Algiers in September.
Algeria had apparently proposed a production cap at 32.5 million barrels per day from current output of 33.6 million as OPEC members debated the size of each member’s cut.
Prior to the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was committed to reducing output to 32.5 million bpd and hoped Russia and other non-OPEC producers would cut another 0.6 million bpd.
Conflict between Saudi Arabia and Iran had dominated previous OPEC meetings.
The 14 members of OPEC accounts for a third of global oil production. In September members agreed to cap output to boosts oil prices, which have halved since mid-2014 when Saudi Arabia began producing an extra 1 million barrels a day to combat growing market share of US shale oil producers.
Iran, Libya and Nigeria have been exempt from cuts as their output has been severely affected by sanctions and domestic conflict.

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