Oil prices rally more than 5% after OPEC agrees supply cuts

The price of oil has climbed above $60 a barrel after OPEC agrees larger-than-expected supply cuts in Vienna, despite pressure from US President Donald Trump to keep production high.

OPEC
Source: Bloomberg

The Organization of Petroleum Exporting Countries (OPEC) helped oil prices soar after as much as 5.4% on Friday, after the cartel finally agreed to make supply cuts after a several tough days of talks in Vienna.

The oil producing cartel eventually agreed to reduce production by 1.2 million barrels a day, with non-OPEC countries like Russia agreeing to shoulder a 400,000 barrel a day share – exceeding market expectations.

Pressure on oil prices finally eased

Oil prices have been in a downward spiral since hitting high of $86.29 in early October, with Brent Crude falling more than 30% to a low of $58.80 a barrel in late-November.

Oils fall from grace was driven by an excess of supply, a consequence of sanctions waivers for some countries to acquire Iranian oil, as well as large US crude reserves and glut of production spurred by US President Donald Trump applying pressure on Saudi Arabia to not cut supply.

But thanks to the agreement reached in Vienna on Friday morning, the price of oil should begin to stabilise.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find an article

Find articles by writer