Brent crude, the global benchmark for oil prices, has soared to $48.74 per barrel, a rise of $2.77 or six per cent. Meanwhile, West Texas Intermediate, its US counterpart, has risen to $47.16 per barrel, up $2.49 or 5.6 per cent.
Opec, which had been meeting in Algiers, has provisionally opted for a production target of between 32.5m and 33m barrels per day. The agreement will be finalised when the group formally meets in November.
Tonight's decision is the first time the oil producing group has reached such an agreement in eight years.
"In the last two years, the global oil market has witnessed many challenges, originating mainly from the supply side," a statement issued by Opec read. "As a result, prices have more than halved, while volatility has increased.
"Oil-exporting countries' and oil companies' revenues have dramatically declined, putting strains on their fiscal position and hindering their economic growth.
"The oil industry faced deep cuts in investment and massive layoffs, leading to a potential risk that oil supply may not meet demand in the future, with a detrimental effect on security of supply."
The oil rally also spilled over into the stock markets, with the Dow Jones Industrial Average rising 110.94 points to 18,339.24 and the S&P 500 gaining 11.44 points to 2,171.37.