OPEC members reach agreement to cut oil production to 32.5m barrels per day

The figure was at the bottom-end of the range proposed at the group's last meeting in Algiers, and despite some opposition from the likes of Iran, the main players have compromised to allow a deal to be reached.

Nevertheless, oil prices surged 8% on Wednesday to over $50 per barrel, but as the news broke both Brent and WTI are drifting from their best levels.

Tense negotiations involving the likes of Saudi Arabia, Iraq and Iran had threatened to prolong the commodity's record price glut, but early indications are that the Saudi government has allowed Iran a better deal than it was initially prepared to give away.

Iran would be allowed to continue increasing its output to roughly 3.9m b/d so as to allow Tehran to recover its share of the market before international sanctions were placed on it.

Until Wednesday, Saudi had pushed for a cap of 3.7m b/d on Iranian production.

Iraq, on the other hand, agreed to reduce its output.

Initially, some analysts were sceptical despite the boost to prices caused by the emerging news of agreement on Wednesday, saying a number of other factors must be considered.

"We are still sceptical that such a dramatic rise in prices is yet justified for a number of reasons. First, the group had already agreed to reduce production to around 32.5m bpd," said Thomas Pugh, Commodities Economist at Capital Economics.

"Second...A failure to announce individual country quotas would be a signal that divisions within the group are still high and that compliance with the agreement is likely to be low," he added.

"Third, OPEC has a terrible history of complying with its own quotas. Indeed, its previous output quotas have been used more as a floor than a ceiling. A lack of individual quotas would only make it more likely that members would simply continue pumping at current rates."

However, at a press briefing later in the day OPEC said it would publish the individual country quotas.

Furthermore, Russia, the biggest producer outside the bloc, agreed to reduce its output of oil by 300,000 barrels a day, OPEC said.

Non-OPEC members were highly likely to meet the cartel's petition that they reduce their own combined output by approximately 600,000 b/d, OPEC added.

ThinkMarkets' Naeem Aslam has said that prices of the commodity should have a base of between $50-60 in the near future at least.

"This will support the oil price in the longer term, but the element which is going to boost the price of oil even further, in the coming days, is the GDP growth around the globe," Aslam commented.