Agreement on supply
Oil price surges after Opec agrees output cut
Brent Crude was trading at $48.40 after the biggest producers indicated they would reduce output from 33.24 milion barrels a day to 32.5m.
North Sea watchers hope the deal will prompt a sustained uplift in the price nearer to the $60 a barrel needed to make exploration viable.
The move follows a softening by Saudi Arabia towards Iran, Nigeria and Libya.
Economic sanctions were lifted on Iran earlier this year, and Libya and Nigeria have had some of their oil facilities damaged by terrorist attacks in recent months.
Oil prices were as high as $100 a barrel in mid-2014. But the global oversupply caused prices to plunge to as low as $26 a barrel in February. The volatility in oil caused stock markets to dive at the beginning of 2016.
In recent months, oil prices have rebounded and last night hit $49 a barrel before easing slightly.
The boost to the oil sector saw stock markets rise overnight. The region’s biggest stock market, the Nikkei 225 was up nearly 1.5%, while Australia’s ASX 200 was 1.1% higher.
Hong Kong’s Hang Seng was up 0.6%, while the Shanghai Composite in China was trading around 0.5% higher.
Energy companies led the rally with Japan Petroleum up 9.5%, Chinese oil producer CNOOC more than 5%, and Australia’s Woodside Petroleum 7% higher.
London shares opened higher, with the FTSE 100 adding 75 points (1.1%) at the open.