Oil rises as much as 5.4% as OPEC+ said to agree cuts

Oil in London surged by as much as 5.4% as OPEC was said to agree on a larger-than-expected deal with its allies to reduce output.

The producer alliance will collectively curb production by 1.2 million barrels a day, after the Organisation of Petroleum Exporting Countries concluded a second day of meetings in Vienna on Friday, more than expected cuts of 1 million barrels a day that had been discussed earlier. Russia also agreed to join the proposals, a delegate said.

OPEC failed to reach on agreement in its first round of meetings on Thursday.

"Finally they got one, nobody really believed it after the morning hours," Commerzbank analyst Carsten Fritsch said by phone. "It’s mainly due to the lowered expectations before the deal."

Oil had plunged by more than 30% earlier this month from a four-year high in October, as concern over excess supply was fuelled by sanctions waivers given for some buyers of Iranian oil and growing US crude inventories and production.

Friday morning saw meetings between Russia’s energy minister and his Iranian and Saudi counterparts, as producers sought to hammer out a deal to reduce output.

Brent for February settlement added as much as $3.26 to $63.32 a barrel on London’s ICE Futures Europe exchange, after falling 2.4% on Thursday. It traded at $62.87 a barrel by 9:07 am New York time.

West Texas Intermediate for January delivery gained $2.15 to $53.64 a barrel on the New York Mercantile Exchange.