ALSO READSaudis, Iran dash hopes for OPEC oil deal in Algeria OPEC set for no deal on oil output as Saudis, Iran at loggerheads Iran wants much steeper Saudi oil cut - OPEC source OPEC set for no deal as Iran rejects Saudi oil output offer Saudis offer oil cut for OPEC deal if Iran freezes output - sources
By Rania El Gamal, Alex Lawler and Ahmad Ghaddar
Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with Iran and after fast-growing producer Iraq also agreed to curtail its booming output.
Saudi Energy Minister Khalid al-Falih said ahead of the meeting that the kingdom was prepared to accept "a big hit" on production to get a deal done.
"I think it is a good day for the oil markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.
OPEC produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.
Saudi Arabia will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf OPEC allies - the United Arab Emirates, Kuwait and Qatar - would cut by a total 0.3 million bpd.
Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production - by 0.2 million bpd.
Iran was allowed to boost production slightly from its October level - a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.
He said oil could rise to $55 per barrel.
WILL OPEC COMPLY?
Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.
A combined output reduction of 1.8 million bpd by OPEC and non-OPEC represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.
Non-OPEC Azerbaijan and Kazakhstan have said they might also cut.
OPEC suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.
The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.
Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, OPEC is like (the late U.S.) President (Ronald) Reagan used to say: 'Trust but verify'."
(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)