Global oil benchmark, Brent crude, traded above $51 per barrel on Wednesday after the Organisation of Petroleum Exporting Countries agreed on its first limit on oil output since 2008.
OPEC had in September said it would reduce production to 32.5 million barrels per day from the current figure of 33.24 million bpd.
Brent, against which half of the world’s oil is priced, had dropped to as low as $46.32 on Tuesday, but jumped to $49.66 per barrel on Wednesday on growing optimism OPEC would agree on a production cut deal later in the day.
Following the outcome of the meeting, Brent rose by $4.18 to $51.50 per barrel as of 6:45pm Nigerian time.
At its 171st meeting in Vienna, Austria on Wednesday, the OPEC Conference studied the report and recommendations made by the high-level committee that was set up following the ‘Algiers Accord’ that was agreed at the 170th (extraordinary) meeting of the OPEC Conference on September 28 in Algeria, among others.
The 14-member oil cartel said in a statement that the conference took note of oil market developments since it last met in Algeria and reviewed the market outlook for the remainder of 2016 and 2017.
It said, “The conference recorded its deep appreciation to the commitment and valued contribution of the high-level committee on the implementation of the ‘Algiers Accord’. The committee’s efforts helped form a consensus among member countries on the basis of a proposal put forward by Algeria to implement a new range of targeted production levels.
“Accordingly, and in line with the ‘Algiers Accord’, the conference decided to implement a new OPEC-14 production target of 32.5mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The agreement will be effective from January 1, 2017.”
The Conference also decided to establish a high-level monitoring committee, consisting of oil ministers, and assisted by the OPEC Secretariat, to monitor the implementation of the agreement. Member countries, in agreeing to this decision, confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had last week said oil price might rise only slightly above $50 per barrel if a consensus was reached, and could fall as low as $44 without a deal.