OPEC reportedly agreed to its first production deal in eight years on Wednesday, a move that is likely to bolster President-elect Donald Trump’s plans for a U.S. drilling revival.
An OPEC delegate told Bloomberg that the group will cut production down to 32.5 million barrels per day, a 1.2 million bpd reduction from its record-breaking October level.
Although the details of the deal have not been made public yet, Bloomberg reports that Iran will be allowed to raise production up to 3.9 million bpd.
Previous disagreements between Iran and Saudi Arabia doomed two attempts to reach a production deal earlier this year.
Saudi Energy Minister Khalid al-Falih told Reuters on Wednesday that Saudi Arabia is willing to take a “big” production hit as part of the deal.
The production deal is also likely to include up to a 600,000 bpd production cut from non-OPEC members, Bloomberg said.
Russian president Vladimir Putin said earlier this month that Russian firms are willing to freeze output but he did not indicate if a production cut would be considered.
Brent crude prices crept past the $50 per barrel mark early Wednesday.
West Texas Intermediate prices climbed over 7 percent to $48.53 per barrel minutes before the opening bell.
The OPEC deal is likely to send global crude prices past the $50 per barrel mark, bolstering Trump’s plan to grow U.S. oil production.
Trump has said his administration will focus on reducing regulations to encourage the creation of more domestic energy jobs and build more energy infrastructure.
In a video address posted earlier this month, Trump said he planned to “cancel job killing restrictions on the production of American energy,” including regulations governing shale oil and gas production as well as coal mining.
Trump added that reducing regulations will create “many millions of high paying jobs” in the energy sector.
Trump has also proposed expanding drilling on U.S. federal lands and said his administration could potentially revive the Keystone XL project.
Trump has not disclosed details about the regulations his administration would lift or alter.
North Dakota Representative Kevin Cramer, a Republican and top Trump energy adviser, told S&P Global Platts earlier this month that curbing regulations will create a “diversity of opportunities for producers.”
The U.S. rig count has been steadily rising over the past several weeks, indicating that upstreams are ramping up activities after over two years of low oil prices.
According to Baker Hughes, the U.S. rig count rose by five to 593 rigs last week compared to 744 rigs a year ago.
While rig counts are still down year-over-year in all the major producing states, the Permian Basin saw its rig count hold above year-ago levels despite a one rig loss.
The Permian Basin saw its rig count tick down to 228 rigs last week, up from 221 during the same week last year.
Despite two years of low oil prices, U.S. production is expected to shed fewer than 1 million bpd this year.
The U.S. Energy Information Administration said in early November that U.S. crude production is expected to average 8.8 million bpd this year, down from an average of 9.4 million bpd in 2015.
The agency expects U.S. crude production to average 8.7 million bpd in 2017, a 100,000 bpd gain for the agency’s October forecast.