OPEC reaches first deal to cut oil output since 2008

The world’s largest oil exporters agreed on Wednesday to cut output for the first time in eight years to erode a global supply overhang that has persisted for two years and halved the value of a barrel of crude.

The Organization of the Petroleum Exporting Countries said it would agree to limit crude oil output to a maximum of 32.5 million barrels per day starting Jan. 1 for six months.

The cut was at the low end of production of a preliminary agreement struck in Algiers in September, and reduces production from a current 33.64 million bpd.

Saudi Arabia, OPEC’s largest producer, has agreed to bear the lion’s share of the cuts, but most member countries, including Iraq, which had initially refused to freeze its output, will limit their production.

Iran, Libya and Nigeria were all given special dispensation not to join in with the reduction, as the three are still fighting to boost their exports and regain market share lost to international sanctions, or civil unrest and violence.

Mohammed al-Sada, the energy minister for Qatar, and current president of OPEC, said key non-OPEC members had agreed to cuts of 600,000 bpd, of which Russia had committed to 300,000 bpd.

OPEC will meet its non-cartel counterparts to discuss their contribution to the effort to limit output on Dec. 9.

Oil soared more than 10 percent to over $50 a barrel and its highest in a month, as investors prepared for the possibility that lower OPEC output would lead to a swifter rebalancing between global crude supply and demand.