Oil price rises on planned Opec production cuts

Major oil producers have agreed to cut production by more than one million barrels per day in a bid to boost energy prices, reports BBC.

Opec members, as well as countries allied with the cartel led by Russia, announced the plans on Friday, sending the price of Brent crude up almost 5.0 per cent.

The cuts are due to start in January and last six months.

The plans come as the industry is grappling with a roughly 30 per cent slide in prices since October.

The fall has been spurred by forecasts for lower demand, as well as a surge of shale production in the US.

Officials said Opec would reduce output by 800,000 barrels per day, based on October's production levels.

Allies of the cartel led by Russia agreed to cut an additional 400,000 barrels per day.

Venezuela, Iran and Libya - countries where the industry has already been disrupted by US sanctions or unrest - are exempt from the plans.

US President Donald Trump has called on Saudi Arabia and other countries to keep prices low.

It is not clear how much of an effect on prices the plans will have over the long run.

Analysts said the cuts may end up amounting to less than announced, and not enough to counteract the broader trends.

We continue to expect that slower economic growth will weigh on oil demand next year, which coupled with rapid growth in US production, will put renewed downward pressure on prices," said Caroline Bain, an economist at Capital Economics.

Earlier reports add: OPEC and its Russia-led allies agreed on Friday to slash oil production by more than the market had expected despite pressure from US President Donald Trump to reduce the price of crude.

The producer club will curb output from January by 0.8 million barrels per day versus October levels while non-OPEC allies contribute an additional 0.4 million bpd of cuts, in a move to be reviewed at a meeting in April.

Oil prices jumped about 5.0 per cent to more than $63 a barrel as the combined cut of 1.2 million bpd was larger than the minimum 1 million bpd that the market had expected.

Saudi Arabia, de facto leader of the Organisation of the Petroleum Exporting Countries (OPEC), has faced demands from Trump to help the global economy by refraining from paring supplies.