Oil prices rose on Friday after OPEC reached an agreement to cut output, according to the Iranian Energy Minister. The meeting was still continuing and an agreement with Non-OPEC producers was not yet set.
U.S. West Texas Intermediate crude futures were up $2.39, or 4.7 percent, at $53.89 per barrel at 9:43 a.m. ET. Brent crude, the international benchmark for oil prices, rose $3.42, or 5.8 percent, to $62.89 a barrel.
OPEC producers agreed to cut output by 800,000 barrels a day beginning in January, according to Iranian Energy Minister Bijan Zangeneh. Non-OPEC producers were proposing a 400,000 barrels a day cut, sources told Dow Jones.
OPEC is holding talks with other oil-producing nations including Russia at its headquarters in Vienna, Austria.
The talks had earlier hit an impasse because Saudi Arabia refused to agree to an exemption for Iran, OPEC sources told Reuters. However, Iran appeared to accept a deal by Friday afternoon in Vienna, though delegates said the group was still negotiating the wording of its official statement.
Energy Aspects says communicating a deal properly is imperative because the market is fragile right now. The energy research firm warns that a “jumbled statement referring to some broad intention to prevent the market from being oversupplied will undoubtedly trigger a further sell-off in prices.”
Crude futures fell sharply during the previous session, after OPEC was unable to agree on the terms of crude output cuts.
The meeting between OPEC and non-OPEC members comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis.
The talks made progress on a critical front on Friday, with Russia agreeing to cut output by 200,000 barrels per day, news agencies reported. The 15-member OPEC group had delayed a decision on how many barrels it would take off the market until Moscow committed to a specific reduction.
OPEC began capping supply in partnership with Russia and several other nations in January 2017 in order to end a punishing downturn in oil prices.
The alliance reversed course and agreed to hike output in June after it removed more barrels from the market than it intended, largely due to the ongoing freefall in Venezuelan output and supply disruptions in Libya.
Iranian Energy Minister Bijan Zangeneh had said his country should not be forced to cut production in light of U.S. sanctions on the Islamic Republic, which are backed by the Saudis. The sanctions against Iran, OPEC’s third-largest producer, have already significantly reduced its exports.
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