VIENNA (Reuters) — Oil prices, which had been falling steadily since October, are now jumping by nearly 5%.

OPEP members and their allies have just agreed to reduce their production by 1.2 mln barrels per day. The cartel will reduce its production by 800,000 bpd while countries outside the organisation, including Russia, will cut theirs by 400,000 bpd. Under US sanctions, Iran would be exempt from this agreement.

The agreement, which will enter into force next month, is better than expected by the market as operators relied more on a cut limited to 1 mln bpd.

Driven by this announcement, the barrel of Brent from the North Sea now wins 5% at $63.1 while the WTI for January delivery gains 4.5% to $53.8 on the Nymex.