The Organisation of Petroleum Exporting Countries (Opec) has agreed its first oil output cuts since 2008, according to sources at the ongoing meeting on Wednesday.
The source said the agreement was in line with an accord reached in Algiers in September.
Opec member Algeria was proposing to set a new production ceiling at 32.5 million barrels per day, down from current levels of 33.6 million.
Brent crude breaks through $50 a barrel
According to Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu, OPEC members are “largely convergent” on a need for a production cut. Kachikwu in Vienna said “we’re optimistic.
Earlier on Wednesday, Brent crude broke through $50 a barrel for the first time since October 28 as Opec was said to be near to finalising an agreement to cut supply and stabilise global markets.
Futures jumped as much as 8.8 per cent per cent in London Wednesday. Opec is very close to a deal that would remove 1.4 million barrels a day of collective production, a delegate to a ministerial meeting underway in Vienna said.
An agreement would include an additional 600,000 barrels a day of cuts from non-Opec suppliers, the delegate said. Russia, the biggest producer outside the bloc, has said that if Opec agrees individual country quotas, it is ready to participate, including possibly by reducing its output, a person familiar with Russian thinking said.
Ministers from Opecare meeting in the Austrian capital to weigh a deal first floated in September to collectively reduce output. Following days of discord, Opec ministers on Wednesday showed optimism for a deal as UAE Energy Minister Suhail Al Mazroui said he expects “some good news” later in the day.
“The market is biting at every comment from Opec and now it seems like a deal is possible,” said Jens Pedersen, an analyst at Danske Bank A/S. “It is imperative they show that they are able to agree on something following previous failed attempts.”
Saudi Arabia Energy Minister Khalid Al Falih said “there are good chances” for a deal and he is hoping non-Opec producers will cut production. Russia, the biggest supplier outside the bloc, had previously said it was only prepared to freeze supply at current near-record levels.
Under an Algerian proposal Tuesday, the 14 members of Opec would cut production to 32.5 million barrels a day from their October level of 33.6 million, according to two delegates familiar with the talks. Angola, which had a key oil field under maintenance in October, will cut from its September level.
Saudi Arabia has accepted that Iran can raise oil production as high as about 3.9 million barrels a day within the framework of the supply deal, according to three people familiar with the matter. Iran previously suggested it freeze production at 3.975 million barrels a day, or about 200,000 barrels a day above current output, two Opec delegates said Monday.