Algiers – The Organization of the Petroleum Exporting Countries (OPEC) approved on Wednesday a preliminary deal to cut oil production for the first time in eight years.
Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of OPEC, announced the deal after several hours of talks Wednesday in the Algerian capital.
Sources quoted by Bloomberg said that the lower end of the production target equates to a nearly 750,000 barrel-a-day drop from what OPEC said it pumped in August — more than half the forecast increase in global oil demand this year.
Reports from Algeria said that the participants reached a “pre-accord” on production curbs to be finalized at an OPEC meeting in Vienna in November.
As news about the preliminary deal was published, oil jumped more than 4 percent in New York.
Bloomberg reported that Brent crude surged as much as 6.5 percent to $48.96 a barrel in London. The shares of Exxon, the world’s largest publicly listed oil company, climbed 4.4 percent, the biggest one-day increase since February.
However, how much each country will produce is to be decided at the next formal OPEC meeting in November, as an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
Iran’s Oil Minister Bijan Zangeneh told reporters on Tuesday that his country was not seeking to forge any deal or agreement in Algeria. He added that he attended the meetings only to exchange views and hold negotiations.
“We will try to reach an agreement for November,” he said, referring to the next formal OPEC meeting in Vienna on Nov. 30.
The Organization of the Petroleum Exporting Countries (OPEC) convened on Wednesday on the sidelines of the International Energy Forum, which gathers oil producers and consumers.
The IEF Ministerial meeting, which brings oil and gas producers and consumers together to discuss challenges facing the global energy markets, will run until September 28. It was attended by over 400 delegates from 54 countries.
In total, around 900 participants have gathered at the Convention Centre for the event.