Oil Jumps 4% on Reports That OPEC Has a Deal to Cut

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Oil Jumps 4% on Reports That OPEC Has a Deal to Cut

Investing.com – It’s not official yet, but word is that OPEC has a deal to cut 1.2 million barrels per day in global oil production, just 100,000 shy of its much-anticipated target, and that was good enough for the market to push prices up 4% in Friday’s morning trade.

Financial Times quoted an unidentified delegate to the OPEC meeting in Vienna as saying the cartel’s members had reached a deal to cut output with a combination of allies outside the group, led by Russia.

Iran has been granted an exemption from the cuts as it is under sanctions from the U.S., the delegate added, according to the FT. Just hours ago, Iran was reported to be the reason for the impasse in reaching a deal as the Islamist Republic steadfastly refused to cooperate of any cuts.

U.S. WTI crude was up $2.25, or 4.4%, at $53.74 per barrel by 9:33 AM ET (14:33 GMT). It earlier surged to a session peak of $54.09.

Brent rose by $2.92, or 4.9%, to trade at $62.98 by 9:51 AM ET (14:51 GMT) after racing to $63.30 earlier.

Even before the two-day OPEC meeting began on Thursday, delegates led by de facto group leader Saudi Arabia had been talking about a deal to cut up to 1.3 million bpd, although differences within the cartel and how much non-member but major producer Russia could contribute to that prevented a quick deal from being reached.

Another hinderance had been U.S. President Donald Trump’s persistent tweets discouraging OPEC, particularly Saudi Arabia, from cutting a single barrel so that oil prices could remain low for the benefit of American consumers. Many had expected the Saudis to play ball with the president, who had been protecting the kingdom from the threat of U.S. sanctions after the murder of the journalist Jamal Khashoggi, whom the CIA believes was killed at the urging of Saudi Crown Price Mohammed bin Salman.

It was not immediately known on Friday how the Saudis will deal with any Trump or Khashoggi fallout from the production cuts agreed to at OPEC.

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