The price of oil is surging on November 30, 2016, after reports that the oil producers cartel OPEC has agreed a deal to cut output.
An unnamed «delegate to the group», reported Bloomberg, that confirmed output will be cut be 1.2 million barrels per day to 32.5 million per day.
As of 8:20 a.m, the price of Brent oil bounced by more than 7%, or more than $3 per barrel, after cratering on November 29, 2016, afternoon.
Earlier in the day, oil prices had increased more than 8%, but pulled back from the high. A deal was reportedly struck after Saudi Arabia and Iran managed to reach a compromise after weeks of tensions.
«It appears the Saudis accepted that Iran, as a special case, can raise production to about 3.9 million barrels a day,» Bloomberg says.
Oil prices initially started crashing on Tuesday afternoon after Iran said that it won't participate in any upcoming cut to production.
Iran's oil minister Bijan Zanganeh said that the country will leave production at the levels decided at OPEC's meeting in Algeria in September.
However, on Wednesday morning, Reuters reported that a delegate from the Iraqi contingent said that «there will be an agreement today,» while the Iranian Oil Minister Bijan Zanganeh said «I'm optimistic.»
OPEC delegates started a closed-door session at around 5:00 a.m. and are expected to give a press conference at around 10.00 a.m.
Earlier, Reuters reported that Saudi Energy Minister Khalid al-Falih said OPEC was close to clinching a deal to limit oil output, adding that OPEC is focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-OPEC members would contribute a cut of another 0.6 million bpd.
«It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles,» Falih said, according to Reuters.
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