Brent crude up over 5% as Opec meetings begin

Oil prices rose sharply on Wednesday as Opec gathered in Vienna to try and clinch the first supply deal since crude prices plummeted two years ago.

Ministers from the 14-member cartel held pre-meeting talks at the Park Hyatt hotel this morning a final attempt to bridge their differences.

Iran’s oil minister Bijan Zanganeh said he was “optimistic” when asked by reporters if there would be an agreement later today.

Meanwhile, Saudi Arabia’s powerful energy minister Kahlid al-Falih told reporters at a pre-meeting press conference that Opec was “getting close to a deal” and said a pre-sanction freeze for Iran was “acceptable.

But he also warned that Saudi Arabia was prepared to leave Vienna without a deal as waiting for the market to recover “on its own was not a bad outcome”.

Brent crude, the international oil marker, jumped over 5 per cent to $49 a barrel.

Opec reached an accord September to bring its total production down to between 32.5m barrels a day and 33m b/d from a near record 33.8m b/d at the moment. But two months later and the group still has not yet agreed how the cuts will be apportioned.

An agreement is needed to try and avert a third year of oversupplied oil markets, which have seen prices more than half since mid-2014 to less than $50 a barrel.

Iran, which is finding its feet after years of Western sanctions, initially said it should be exempt like conflict-ridden Nigeria and Libya. It has since softened its stance saying it will freeze its production, but the level has been problematic. Mr Zangeneh said on Wednesday morning there was a framework for a deal.

Saudi Arabia, which will shoulder the burden of any production cuts along with its Gulf allies, has asked Iran to curb output at close to 3.7m b/d, although it privately it has indicated it may allow a higher level near 3.8m b/d, signalling that it may give some ground.