Oil prices surge on optimism over OPEC deal

Is OPEC finally about to reach a deal?

The price of crude oil jumped 8% Wednesday to $48.90 per barrel on optimism that major oil producers were closing in on a deal to cut production at a meeting in Vienna.

Saudi Arabia, the cartel’s de facto leader, hinted that it would allow regional rival Iran to pump at pre-sanction levels as part of a deal.

“I won’t discuss specific numbers,” Saudi oil minister Khalid Al-Falih told CNNMoney. “In principle Iran don’t have to cut — they would be able to produce pre-sanction levels.”

A senior Iranian source said they had “agreed to settle on amount that is a agreeable to all parties.”

The oil cartel has been trying for a year to freeze or cut production in hopes of boosting prices.

In September, producers achieved a breakthrough and preliminarily agreed to trim output for the first time since 2008. The tentative agreement sent crude soaring above $50 a barrel and is meant to be confirmed in Vienna.

It’s possible that Nigeria, Libya and Iran will be able to secure an exception from the agreement.

The three countries are trying to increase their output. Nigeria and Libya saw their production drop because of of armed conflict. Iran is keen to increase output to the levels it was pumping before being slapped with nuclear sanctions.

Investors are trying to contain their optimism, because in order to push prices higher, the cuts will have to be substantial. The cartel pumped out record amount of oil in October — well over 33.6 million barrels a day.

OPEC said before the meeting they are hoping to cut output to roughly 32.5 million.

— Matt Egan and Ivana Kottasova contributed reporting.

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