16:55 EST, 1 December 2016 | 16:55 EST, 1 December 2016
Oil soared to its highest level of the year last night following this week’s historic deal to cut production.
The price of crude rose more than 5 per cent to above $54 a barrel – a level not seen since summer 2015 – taking gains in the past two days to around 17 per cent.
The rally pushed oil shares higher on the London stock market with Royal Dutch Shell and BP both up 2.3 per cent.
Small rival Tullow Oil, which gained more than 13 per cent on Wednesday, was up another 6 per cent.
2016 high: The price of crude rose more than 5% to over $54 a barrel – taking gains in the last two days to around 17%
But the surge in the oil price is set to spell misery for millions of motorists as it drives up the cost of fuel in the build up to Christmas – traditionally the most expensive time of year for many families.
Experts believe that a litre of petrol will top 120p in the coming weeks, having been just £1 earlier this year.
The oil price rally follows Wednesday’s agreement to curb production – the first such deal for eight years.
Opec, the cartel of oil producing countries which controls around one-third of global output, said it would cut production by 1.2million barrels a day to 32.5million.
The move was seen by producers as an attempt to boost the oil price following its fall from around $115 a barrel in mid-2014 to less than $30 earlier this year.
But analysts warned the sharp rise in the oil price could be reversed in due course.
Jane Sydenham, investment director at Rathbone Investment Management, said it was difficult to say how this will play out in the longer term.
‘We’re currently experiencing a knee-jerk reaction, unsurprising since this is the biggest co-ordinated action in eight years.
It is likely that this will run on for a little while longer, but how the markets price in the unexpected oil inflation is something we are yet to see,’ she said.