Oil prices jump on OPEC-led production cut deal
Brent crude bounces back from below $60 a barrel on Friday after a deal to drain global stockpiles through a production cut.
Friday 7 December 2018 15:22, UK
Global oil prices have surged after a tentative deal was reportedly cut to ease production and tackle a fresh supply glut.
US crude and Brent crude prices entered bear market territory last month - only weeks after hitting their highest level for four years - as growing supplies of US shale oil combined with fears around a slowing global economy.
On Friday, following a tough round of talks in Vienna, the Organisation of Petroleum Exporting Countries (OPEC) signalled output would fall next year - and by a greater margin than some market experts had predicted.
It was understood that a combined cut of 1.2 million barrels per day (bpd) was agreed by OPEC with Russia, which is not a member, also joining the effort.
However, the Reuters news agency said Russia's output figure was yet to be fully nailed down.
:: Oil bear market shows US shale has teeth
A major sticking point had proved to be a demand by sanctions-hit Iran that it be exempt from some of the reduction restrictions, though Tehran later indicated it was happy with the outcome.
BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum: "(A cut of) 1.2 million bpd, if implemented promptly and fully, should be enough to largely attenuate, but not eliminate, expected implied global inventory builds in the first half of next year."
Competition to Brent from US shale output has weighed on prices at a time when financial markets are worried about the health of the global economy and the fallout of the US-China trade war.
Production from the US, Russia and OPEC nations grew by more than three million bpd in 2018 - the majority of the gain a result of US output growth.
The outcome of the OPEC meeting will disappoint Donald Trump.
The US president had urged OPEC not to put economic growth at risk by cutting output and raising prices.
US light crude was trading up 4% at $53 a barrel on Friday afternoon while Brent was 5% higher at $63.
The shift higher is unlikely to have a big effect on petrol prices over the Christmas holiday period for UK motorists as pump costs have been slow to come down since the dramatic fall in oil prices began in October.