Is this the end of cheap oil?

OPEC plans new production limits

Is this the end of cheap oil?

The Transocean Winner drilling rig is seen off the coast of the Isle of Lewis | Image: Andrew Milligan / PA Wire/Press Association Images

Oil prices have been boosted by news that OPEC producers are planning a production cut.

This comes after more than four fours of sideline talks between members of the group in Algeria overnight.

According to a number of the oil ministers an agreement will be formally introduced when OPEC members officially meet in Vienna in November.

After the news was announced the price of Brent Crude oil rose by 6% to nearly $49 a barrel.

The group will limit output to 33 million barrels per day - down from nearly 33.5 million recorded last month.

Iran's Oil Minister Bijan Zanganeh described this as an "exceptional decision."

Until now disagreements between Iran and Saudi Arabia had foiled attempts to reach a deal to reduce output.

However, given the gap between this announcement and the November meeting there is time for it to become derailed - and the details of the deal and individual countries' quotas are to be agreed.

Many OPEC members' oil-dependent economies have struggled as prices of the fuel have effectively collapsed.