OPEC said to agree to output cut of 1.2 million barrels a day

Oil rose the most in nine months after OPEC ministers were said to have forged a deal to cut production, sending stocks of energy producers and currencies of commodity-exporting nations higher.

Crude rebounded from a two-week low after some delegates at the meeting of oil producers in Vienna on Wednesday said they reached an agreement to cut supply by 1.2 million barrels a day. Russia’s ruble, Norway’s krone and Mexico’s peso advanced as BP Plc and Royal Dutch Shell Plc both gained. Royal Bank of Scotland Group Plc slipped to a three-week low after failing the Bank of England’s toughest-ever stress test. Treasuries fell and the dollar extended its gain as a report showed U.S. companies boosted hiring in November faster than forecast.

The agreement to cut production for the first time in eight years reverberated through financial markets, lifting prospects for countries whose finances have been ravaged by the oil crisis. The market earlier this week had assigned odds of just 30 percent that producers would overcome differences, according to Goldman Sachs Group Inc.

Russian Participation

The OPEC deal would be a six-month accord monitored by a committee, said Iraq’s al-Luaibi, adding that he hopes the curbs will boost the oil price to more than $55 a barrel.

OPEC will reach an agreement and Russia will join in cuts following talks between Vladimir Putin and Iranian president Hassan Rouhani, according to Iranian Oil Minister Bijan Zanganeh.

“The Russian energy ministry, which met with our friends Algeria and Venezuela in Russia, changed their view and said they will cut their production,” he said on Wednesday.

If there is an OPEC agreement to cut output that assigns production quotas to members, then Russia is ready to join the deal with a more flexible position than a freeze, including potentially decreasing its own production, said a person familiar with Russian thinking.

The Kremlin had previously resisted requests that it join the cut, offering instead to freeze production at current levels.

Other senior OPEC officials were optimistic about a deal going into the meeting. Mohammed Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, and United Arab Emirates Oil Minister Suhail Mohammed Al Mazrouei, who said he expects some good news later in the day.

“The sentiment generally is optimistic and positive,” Saudi Arabia’s Oil Minister Khalid Al-Falih said on Wednesday. “Any production-restraint agreement has to be distributed in an equitable way. We are getting close.”

Sentiment Optimistic

“We’re optimistic,” Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu said in a Bloomberg TV interview from Vienna. “There’s still a few gray areas we have to patch up, but I like to go in believing that we’re going to reach a deal.”

Read more: The balance of power in OPEC shifts toward Iran and Iraq

Iran, Nigeria and Libya will be exempt from any OPEC agreement to cut supply, while Iraq is expected to make a reduction, Venezuelan Energy Minister Eulogio Del Pino told reporters at OPEC’s headquarters before the formal meeting started.

“There will be a production cut, agreed by everyone, with quotas for countries,” Algerian Energy Minister Noureddine Boutarfa said on Wednesday. Algeria “put the proposal on the table and it was the one that was agreed,” he said.

c production to 32.5 million barrels per day from their October level of 33.6 million, according to two delegates familiar with the talks.

OPEC will reach an agreement, said Iranian Oil Minister Bijan Namdar Zanganeh, although his country will find another arrangement instead of freezing output. That upbeat tone was echoed by Mohammed Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, and United Arab Emirates Oil Minister Suhail Mohammed Al Mazrouei, who said he expects some good news later in the day.

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