Opec agrees last-minute deal to slash output by 1.2m barrels per day

The price of Brent crude edged up yesterday as some of the world’s major oil producers agreed a last-minute deal to cut their output.

Members of the Organisation of the Petroleum Exporting Countries (Opec) and allies such as Russia committed to reducing oil production by a higher-than-expected 1.2m barrels per day at a meeting in Vienna yesterday.

Prices rallied almost three per cent to $62.92 following the move, which defies President Donald Trump’s calls to maintain high levels of production.

Saudi Arabia, Opec’s largest producer, has been lobbying for a concerted deal to restrict output in a bid to push up energy prices, which have fallen 30 per cent since October.

According to financial services firm Cantor Fitzgerald Europe, the deal is likely to stabilise prices at between $60 and $65 a barrel.

Venezuela, Iran and Libya have all been made exempt from the cuts, which come into effect from the start of next year.

“The cut is a real positive after some fairly tough negotiations,” according to Markets.com chief market analyst Neil Wilson.

“The fact that the OPEC-Russia alliance is still holding matters as much as the details of the deal itself. It’s probably a little better than the market had been expecting, but not by a lot. I’d still say that a deeper cut would be needed to really see oil rally back to $70. Indeed the rally has failed to top the daily peaks seen on Dec 4th and 5th, which is indicative of the fact the market is not fully bought into this deal as being enough to tilt the market fundamentally back into balance quickly. We need to see those highs scaled before we would be able to say this is the start of a sustained rally back to $70.”

He added: "The deal does though suggest we have something of a floor under Brent at $58, which is now forming very stiff support.”