Members of the OPEC oil cartel and other nations, including Russia, have agreed to extend production cuts aimed at propping up prices until the end of next year.
OPEC, the Organisation of the Petroleum Exporting Countries, had sought a new agreement as a worldwide glut continues to put downward pressure on oil costs.
The countries – all Brent crude producers and led by Saudi Arabia – entered a deal a year ago to cut output by 1.8 million barrels a day until March 2018.
That action – coupled with slower-than-expected growth in the production of cheaper US shale oil and higher demand in an improving world economy – has contributed to Brent rising from $50 a barrel then to just over $63 currently.
Image: The RAC believes UK drivers have seen the worst of fuel price rises – for now
The 14-member OPEC cartel, which controls a third of the world’s oil output, agreed to the nine-month extension following its annual winter meeting in Vienna.
It then sought, and said it had secured, the support of 10 non-members including Russia – agreeing that the curbs could be cut short, if needed, with a potential review slated for June.
The move was anticipated by the markets and so prices were stable when the deal was announced though Russia was yet to comment on its continued participation.
Saudi energy minister, Khalid al Falih, had pledged before the meeting: “When we get to an exit, we are going to do it very gradually… to make sure we don’t shock the market.”
He hailed the result as “a great day” – especially as Libya and Nigeria had agreed not to raise output beyond levels agreed this year.
Video: Why Iran backs Saudi oil production curbs
In the UK, the fall in the value of the pound since the EU vote has largely exacerbated the rising cost of oil over the past 17 months because it is priced in dollars.
However, RAC fuel spokesman Simon Williams believed the worst was over because sterling had recovered some poise from its Brexit-led low.
He said: “The market had been expecting OPEC to extend its production cut until the end of next year so after an initial rise in the price of oil, things have cooled down.”Even though the oil price is now consistently above $60 a barrel, the increased value of sterling against the dollar is helping to keep fuel prices down at the pumps.
“This is good news for motorists as it means petrol and diesel prices are unlikely to shoot up, in fact we may even see them come down very slightly in the next week or so.”