Melbourne petrol prices tipped to jump up to 8c

The deal has already driven crude oil prices up by 9 per cent.

CommSec economist Savanth Sebastian said Australians have about three weeks left of cheaper petrol before the oil price rise is felt at the bowser.

“The days of cheap $1 fuel are certainly over … essentially around Christmas is when you will see the impact from these price increases,” he said.

“Motorists will probably be better off filling up in the next couple of weeks when they get to the low point in the cycle.”

NRMA spokesman Peter Khoury said the oil price jump was a “bummer” for motorists who can expect to pay up to 8 cents per litre more for petrol.

“Forecasters are suggesting we are looking at an 8-14 per cent increase in the price of oil which possibly means an increase of 6-8 cents per litre (at the bowser),” he said.

Members of the Organisation of the Petroleum Exporting Countries, the cartel that controls about one-third of the world’s oil production, agreed to the deal to try to end record oversupply that has seen oil prices drop from $US146 a barrel in 2008 to below $US30 a barrel at the start of this year.

Crude oil quickly rose by 9 per cent to around $US50.50 a barrel following the deal, which cuts OPEC’s production to 32.5 million barrels per day — a fall of around 1.2 million barrels.

Australian ASX-listed energy companies shot up on the news, with Santos, Oil Search and Beach Energy shares closing up 11.7 per cent, 9.15 per cent and 11.25 per cent respectively yesterday.

Economist Clifford Bennett said the landmark OPEC deal was a “sea change” for the cartel, which last agreed to cut production 8 years ago.

“Going forward this shows OPEC is willing to cut production whenever it senses there is an oversupply in the global oil market,” he said.

Mr Bennett said this means the days of cheap oil are now over.

“It is a win-win game from OPEC from here on in … even with their production cuts their revenue has gone up 7-8 per cent today,” he said.

The Organisation of Petroleum Exporting Countries President Mohammed Bin Saleh Al-Sada said the production cuts would take effect on January 1 next year.

Saudi Arabia, the largest OPEC producer will take the biggest hit, cutting 486,000 barrels from its production of more than 10 million barrels a day.

Iran’s output level was trimmed only slightly to 3.797 million barrels a day from 3.975 million barrels.

Mr Al-Sada said major non-OPEC producers were also considering reducing their oil output to work in concert with OPEC.

He did not list the countries involved beyond saying Russia was prepared to cut 300,000 barrels from its output of more than 10 million barrels a day.