The Organisation of the Petroleum Exporting Countries (OPEC) has agreed to cut crude output for the first time in eight years.
Following the announcement, the price of Brent oil has risen by almost 6% to nearly $49/bbl (£37.2/bbl).
Major oil producers struck the deal during a meeting in Algeria yesterday, agreeing to reduce production by 700,000 barrels per day.
That means crude output from OPEC countries will be limited to between 32.5 million and 33 million barrels a day, according to Mohammed Bin Saleh Al-Sada, Qatar’s Energy Minister and current President of OPEC.
The full details of the agreement will be finalised at a formal OPEC meeting in November in Vienna.
OPEC members have been looking for an agreement since oil prices fell from $110/bbl (£83.6/bbl) in the past two years due to oversupply and low demand.
In the UK, a report by Oil & Gas UK said production of oil and gas in the country increased last year but exploration fell to record lows.