Oil prices surged.

This will be the first time in eight years that the Organization of Petroleum Exporting Countries (OPEC) has done this.

The agreement was approved at a meeting in Algeria yesterday. Following this news, world oil prices surged. US WTI crude oil at one point rose 4.6% to $46.71 per barrel. Meanwhile, Brent crude oil increased 6.5% to $48.96 per barrel.

Crude oil prices are rising. (Illustrative image)

Global oversupply has driven oil prices down for more than two years. And OPEC has refused to cut production ever since.

However, under yesterday's agreement, oil production there is projected to fall to 32.5-33 million barrels a day, down from the current 33.4 million barrels. Saudi Arabia – the largest oil producer – is expected to cut production by 350,000 barrels a day. Other OPEC countries will also follow suit. However, the exact figures have not yet been released.

Three countries are exempt from this requirement: Iran, Nigeria, and Libya. Economic sanctions against Iran were only lifted earlier this year. Libya and Nigeria, on the other hand, have had numerous oil production facilities attacked by terrorists in recent months.

In mid-2014, oil prices peaked at $100 a barrel. However, oversupply dragged prices down to a low of $26 a barrel in February. This also caused global stock markets to plummet earlier this year. In recent months, oil prices have recovered somewhat, with WTI crude oil hovering around $47 a barrel.

According to VNE