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OPEC reaches preliminary accord to curb oil production

General view of a meeting of oil ministers of the Organization of the Petroleum Exporting countries, OPEC, in Algiers, Algeria, Wednesday, Sept. 28, 2016. Officials from the Organization of the Petroleum Exporting Countries will meet informally on the sidelines of an energy conference in Algiers to try to find common ground on how to stabilize oil markets. (AP)
By Aomar Ouali Associated Press

ALGIERS, Algeria – OPEC nations reached a preliminary agreement Wednesday to curb oil production for the first time since the global financial crisis eight years ago, pushing up prices that had sunk over the past two years and weakened the economies of oil-producing nations.

The deal was reached after several hours of talks in the Algerian capital, though output levels must still be finalized at an OPEC meeting in Vienna in November.

The preliminary deal will limit output from the Organization of the Petroleum Exporting Countries to between 32.5 million and 33 million barrels per day, said Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of OPEC. Current output is estimated at 33.2 million barrels per day.

Benchmark U.S. crude jumped $2.38, or 5.3 percent, to $47.05 a barrel in New York. Brent crude, the international standard, was up $2.72, or 5.9 percent, to $48.69 a barrel in London.

Long-running disagreements between regional rivals Saudi Arabia and Iran had dimmed hopes for a deal at Wednesday’s talks.

Iran had been resistant to cutting production, as it’s trying to restore its oil industry since emerging from international sanctions over its nuclear program earlier this year. According to Wednesday’s deal, Iran exceptionally will be allowed to increase production to 3.7 million barrels a day, according to Algerian participants at the meeting. It is currently estimated to be pumping around 3.6 million but had been aiming for 4 million per day.

The deal was a victory for Algerian officials who shuttled overnight Tuesday and all day Wednesday among participants to try to reach common ground on how to support oil markets. The OPEC officials met informally on the sidelines of an energy conference in Algiers.

“Our optimism was vindicated,” said Energy Minister Noureddine Boutarfa. “The decision was unanimous, and without reservations.”

Those lower prices have hurt many oil-producing nations hard, particularly OPEC members Venezuela and Nigeria, but also Russia and Brazil.

“We reached a very positive deal,” said Nigerian Oil Minister Emmanuel Ibe Kachikwu. He said all countries will reduce output but the specific quotas will be set in Vienna in November.