Oil surges 6% as Saudi and Iranian ministers optimistic about OPEC deal

Oil prices shot up 6% on Wednesday after noises from the meeting of the Organization of Petroleum Exporting Countries suggested that an agreement to cut production levels was afoot.

Ministers from Iran and Saudi Arabia, two of the key members of the organisation which is meeting in Vienna this week, have sounded an optimistic note about the potential agreement.

Saudi energy minister Khalid al-Falih said that progress had been made, and that they were willing to concede some ground to Iran on certain issues. He said they were "close" to coming to an agreement.

His Iranian counterpart Bijan Zanganeh said that every member of the meeting agreed there was a "framework" for the parties to work on, adding that all sides had indicated a willingness to compromise on the key issues.

Iran had previously expressed an unwillingness to consider a production cut, having recently had sanctions on its levels of the commodity lifted.

International oil benchmark Brent crude was $3 higher early on Wednesday, a rise of 6%, heading towards the $50 mark.

However, some analysts have expressed concerns that a deal is not yet done, and any breakdown in the discussions in Vienna could have a significant downward effect on oil prices.

"With the economies of many OPEC member nations near wholly dependent on high oil prices to function, a deal to cut oil production looks to be close," said Xtrade chief market analyst Paul Sirani.

"However, If today's OPEC meeting fails to bring about the necessary agreement then we could well see the price of the North Sea benchmark sailing south at a rate of knots towards the $40 mark and possibly below," Sirani added.