SINGAPORE Dec 12 Oil prices shot up over 4
percent to their highest level since 2015 early on Monday after
OPEC and other producers over the weekend reached their first
deal since 2001 to jointly reduce output in order to rein in
oversupply and prop up the market.
Brent crude futures, the international benchmark for
oil prices, soared to $57.89 per barrel in overnight trading
between Sunday and Monday, its highest level since July 2015.
U.S. West Texas Intermediate (WTI) crude futures also
hit a July 2015 high of $54.51 a barrel.
Brent and WTI prices eased to $56.54 and $53.74 respectively
by 0010 GMT, but were both still up more than 4 percent from
their last settlement.
With the deal finally signed after almost a year of arguing
within the Organization of the Petroleum Exporting Countries and
mistrust in the willingness of non-OPEC Russia to play ball, the
market's focus will now switch to compliance with the agreement.
ANZ bank said on Monday that Saudi Aramco, Saudi Arabia's
state-controled oil company, had "started informing customers
that their allocations would be reduced in January 2017, in line
with its commitment to the recent OPEC production cut
OPEC has said it will slash output by 1.2 million barrels
per day from Jan. 1, with top exporter Saudi Arabia cutting
around 486,000 bpd in a bid to end overproduction that has
dogged markets for over two years and pushed the economies of
many oil exporting countries into crisis.
On Saturday, producers from outside the 13-country OPEC
group agreed to reduce output by 558,000 bpd, short of the
initial target of 600,000 bpd but still the largest contribution
by non-OPEC ever.
Of that, Russia will cut 300,000 bpd. Russia said its
reduction would be gradual, adding that by the end of March
Russia would be producing 200,000 bpd less than its October 2016
level of 11.247 million bpd.
Russian output would fall to 10.947 million bpd after six
months, it said.
(Reporting by Henning Gloystein; Editing by Richard Pullin)