Oil prices closed more than 2% higher on Friday after OPEC Member States and Russia and other allies agreed to cut production to digest global inventories and support markets, but investors feared that production cuts would not offset growing production and that oil price increases were limited.
OPEC and its Russian-led allies agreed to cut production by 1.2 million barrels a day next year, which will be reviewed at a meeting in April.
Despite U.S. President Trump's call for a cut in crude oil prices, the cut is still higher than the market had previously expected to be the lowest 1 million barrels per day.
Iraqi Oil Minister Jarban said after OPEC concluded its two-day Vienna meeting that OPEC would reduce production by 800,000 barrels per day from January next year, while non-OPEC producers would reduce production by 400,000 barrels per day.
OPEC's cut-off agreement has been pending for two days, first because of concerns that Russia's cut-off rate is too small, and secondly because of concerns that Iran will not be exempted, thus hampering the agreement. Iran's crude oil exports have been stagnated by U.S. sanctions.
But after hours of negotiations, Iran turned the green light on OPEC and Russia said it was ready to cut production further.
Russia has pledged to reduce daily production by 228,000 barrels from 11.4 million barrels in October, but has said it will gradually reduce production and complete it in a few months.
Brent crude oil futures rose $1.61, or 2.7%, to close at $61.67 a barrel. At the beginning of the day, the contract fell below $60 a barrel, when oil exporters seemed likely to keep production targets unchanged. Subsequently, after news of an agreement to cut production came out, Brent crude oil futures hit a mid-day high of $63.73, then fell later in the day.
U.S. crude oil futures rose $1.12, or 2.2%, to $52.61 a barrel, earlier hitting a daily high of $54.22.
U.S. crude oil prices rose 3% this week and Brent crude oil prices rose 4.8%.
Since October, the price of crude oil has fallen by 30% due to the surge in oil supply and the weakening of global demand growth.
Although the news of production cuts initially pushed up oil prices, enthusiasm cooled as markets feared that production cuts would not offset new U.S. output.
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