Oil prices soared to 18-month highs on Tuesday, with the production cut agreed by both OPEC and non-OPEC members giving investors high hopes for 2017.
The production cut, which was agreed last month, came into effect on Sunday. Investors are hopeful that the deal will curb the oversupply of oil on the market, which has been weighing down prices for months.
On Tuesday officials from Oman and Kuwait confirmed they would be cutting oil their production in January, pushing up the price of oil and boosting investor faith in the deal.
OPEC nations, as well as non-members such as Russia and Mexico, have agreed to curb output by about 1.8 million barrels a day.
The deal took several months to negotiate, with underlying tensions between Saudi Arabia and Iran complicating the process. Tamas Varga, senior oil analyst at London brokerage PVM Oil Associates, said: “If 2016 was the year of words, 2017 must be the year of actions.”
Ric Spooner, chief market analyst at CMC Markets, commented:
“Markets will be looking for anecdotal evidence for production cuts. The most likely scenario is OPEC and non-OPEC member countries will be committed to the deal, especially in early stages.”
Brent crude rose over 2 percent earlier on Tuesday, and is now trading up 1.81 percent at $57.85 per barrel. WTI Crude is up 1.88 percent at $54.73 (1557GMT).