Oil prices surge after OPEC ministers announce output cut

The oil producers cartel OPEC has agreed a preliminary deal to cut production for the first time in eight years, with the group's leader, Saudi Arabia, softening its stance on Iran amid mounting pressure from low oil prices. The move has sent crude prices surging.

"OPEC made an exceptional decision today ... After two and a half years, OPEC reached consensus to manage the market," said Iranian Oil Minister Bijan Zanganeh, who had repeatedly clashed with Saudi Arabia during previous meetings.

He and other ministers said the Organisation of the Petroleum Exporting Countries would reduce output to a range of 32.5-33 million barrels per day. OPEC estimates its current output at 33.24 million bpd.

However, according to Reuters news agency, how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

Brent crude, the international benchmark for oil, rose almost 6% to nearly $49 a barrel on the news.

While oil saw only small gains in early Asian trade, energy firms across the region soared.

Oil ministers said full details of the agreement would be finalised at a formal Opec meeting in November.

Output will reportedly fall by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.