OPEC nations reached a preliminary agreement Wednesday to curb oil production for the first time since the global financial crisis eight years ago, pushing up prices that had sunk over the past two years and weakened the economies of oil-producing nations.
Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of OPEC, announced the deal after several hours of talks in the Algerian capital. The levels must still be finalized at an OPEC meeting in Vienna in November.
The preliminary deal will limit output from the Organization of the Petroleum Exporting Countries to between 32.5 million and 33 million barrels per day, he said. Current output is estimated at 33.2 million barrels per day.
Benchmark U.S. crude jumped $2.38, or 5.3%, to $47.05 a barrel in New York. Brent crude, the international standard, was up $2.72, or 5.9%, to $48.69 a barrel in London.
Long-running disagreements between regional rivals Saudi Arabia and Iran had dimmed hopes for a deal at Wednesday’s talks.
Iran had been resistant to cutting production, as it’s trying to restore its oil industry since emerging from international sanctions over its nuclear program earlier this year. According to Wednesday’s deal, Iran will be allowed to increase production to 3.7 million barrels a day, according to Algerian participants at the meeting. It is currently estimated to be pumping around 3.6 million.
The OPEC officials met informally on the sidelines of an energy conference in Algiers to try to find common ground on how to support oil markets.
“We reached a very positive deal,” said Nigerian Oil Minister Emmanuel Ibe Kachikwu. He said all countries will reduce output but the specific quotas will be set in Vienna in November.
Earlier, Iranian Petroleum Minister Bijan Namdar Zanganeh had played down the OPEC gathering, calling it “just a consultation meeting.”
The price of crude oil has fallen sharply since mid-2014, when it was over $100 a barrel, dropping below $30 at the start of this year.
Saudi Arabia, the world’s biggest oil producer and Iran’s rival for power in the Middle East, appeared to be more amenable to some sort of production limit, certainly more so than in April, when OPEC failed to agree on measures to curb supplies.
Saudi Energy Minister Khalid Al-Falih this week promised to “support any decision aimed at stabilizing the market.”
Over the last couple of years, OPEC countries, led by Saudi Arabia, had been willing to let the price of oil drop as a means of pressuring some U.S. shale oil and gas producers. Shale oil and gas requires a higher price to break even.
Those lower prices have hurt many oil-producing nations hard, particularly OPEC members Venezuela and Nigeria, but also Russia and Brazil.
2:25 p.m.: This article has been updated with more details and background on the agreement.
This article was originally published at 2:15 p.m.