OPEC members, including Saudi Arabia, will curb output by 800,000 barrels per day. Although the cut is much higher than expected, that is why news of crude prices in the global market has increased by 5.4 percent.
The West Texas Intermediate for January delivery was up 1.12 USA dollars to settle at 52.61 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery rose 1.61 dollars to close at 61.67 dollars a barrel on the London ICE Futures Exchange. Russian energy minister Alexander Novak returned to Vienna on Friday after discussing Opec with Russian President Vladimir Putin in Moscow.
While President Trump repeatedly urged OPEC to keep things as they were, his words went unheeded on Friday.
Oil producers have been under pressure to reduce production following a sharp fall in oil prices over the past couple of months.
OPEC is getting stiff competition from increased oil output in the USA, which is now producing more oil than any other country.
As oversupply rises with the US, however, Russian Federation and Saudi Arabia pumping oil at record levels, crude prices slumped more than 30 percent in the last two months.
Iran reportedly demanded exemption from the cuts amid Saudi-backed United States sanctions, but Saudi Arabia was refusing to agree to the exemption.
In order to put an end to crude oil prices, the organization of oil producing countries has agreed to cut the oil production.
The Saudi government threatened to retaliate against any punishment such as economic sanctions, outside political pressure or even "repeated false accusations" about the Khashoggi killing, although it walked back the threat subsequently following signs that the Trump administration had no appetite for imposing sanctions on the long-term USA ally. The three countries are the world's largest producers of oil.
OPEC's decision will, however, not affect Iran, Venezuela and Libya, which were granted exemptions due to their current peculiar economic circumstances. The US had sought a reduction in oil prices. The price of Brent, the European benchmark, surged five percent yesterday after reports emerged that OPEC and its non-member partners had agreed to cuts.
In the last week of November, the country exported more oil, gasoline and other petroleum products than it imported, marking a milestone for the domestic industry and for a White House that has been eager to secure what it calls "energy independence" with new domestic production.
"So when does the US send a delegate to OPEC meetings?" said Kyle Cooper, consultant at ION Energy in Houston. On Wednesday, just before OPEC officials started talking about how to stabilize the oil market, Trump lobbed a rhetorical grenade in their direction: "Hopefully OPEC will be keeping oil flows as is, not restricted".
One stumbling block to an agreement had been Iran, Saudi Arabia's regional rival and fellow OPEC member, which had been arguing for an exemption to any cuts because its crude exports are already being pinched already by USA sanctions. The kingdom is under economic pressure after a collapse in oil prices last month, yet it's seeking to walk a fine line between preventing a surplus next year and appeasing President Donald Trump. He added: "The World does not want to see, or need, higher oil prices!" Analysts had forecast a decline of 2.39 million barrels.