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Oil price soars after landmark deal to cut supply

Oil rig vidOil prices have surged by more than 6% after producers reached their first deal since 2001 to slash output.

A barrel of Brent crude climbed close to $58 overnight, its highest level since July 2015, before edging back to just under $57.

The rise was predicted after 11 producing nations who are not members of the Opec group, agreed to cut their output at the weekend.

Opec, the 13-producer cartel led by Saudi Arabia, has already agreed a cut of 1.2 million barrels a day to combat the global glut in oil.

Now the non-Opec members, which include Russia, said their supplies will fall by 558,000 barrels per day.

It is the first time in 15 years that a global agreement has been reached.

The moves by the two dominant groups come after prices nosedived from their $115 a barrel peak in the summer of 2014. Saudi Arabia raised output in an attempt to drive higher-cost producers such as US shale firms out of the market.

The price dipped to below $30 in January.

Among the non-Opec countries attending this weekend’s meeting were Azerbaijan, Bahrain, Malaysia, Mexico, Oman, South Sudan and Sudan.

There is some concern that the agreement from the non-Opec countries could be window dressing.

Analysts question whether they are attempting to present a natural decline in output as their contribution to the deal.

However, Saudi Energy Minister Khalid al-Falih called the deal “historic”. Speaking at a news conference, he said: “This agreement cements and prepares us for long-term cooperation.”

Russia will contribute 300,000 of the non-Opec barrel cut. Energy Minister Alexander Novak told the same briefing: “Today’s deal will speed up the oil market stabilisation, reduce volatility, attract new investments.




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