Oil cartel Opec decided to extend cuts to production until March 2018, after previous efforts to limit supply did not do enough to raise oil prices.
The cuts will be shared by countries from outside the price-fixing group, according to Reuters.
Brent crude futures prices rose by as much as one per cent to reach their highest point since mid-April in early morning trading, but fell steeply after disappointment about the duration of the cuts emerged. Some analysts had earlier mooted a 12-month cut to production.
Futures for the North Sea benchmark rose as high as $54.67 per barrel, before falling below $53 per barrel. Meanwhile the North American benchmark, West Texas Intermediate, rose to highs of $51.93 per barrel before dipping as far as $50.08 per barrel.
Countries from the Organization of the Petroleum Exporting Countries (Opec) and non-Opec members met in Vienna to discuss the plans for the cuts, with the length of an extension still at issue after broad agreement on the path was reached.
The extension would come after a landmark deal at the end of 2016 which saw Opec and other countries, including Russia, agree to cut production by 1.8m barrels per day in the first half of this year.
Saudi Arabia’s powerful oil minister, Khalid al-Falih, is chair of the group as the cartel’s largest member looks to shore up the oil price by reducing the size of oil inventories after years of oversupply. Falling prices had severely damaged oil-producing economies reliant on the commodity wealth for government revenues.
Addressing the delegates before the meeting, al-Falih said: "We have more work to do in lowering inventories toward the last five-year average, but we are on the right track."
Iran’s oil minister yesterday confirmed the cuts were likely to go ahead, according to Iranian news agency Shana.
He said “It is apparent that there is an agreement between members of the organisation to extend the body's output cut plan."
Brent crude oil prices have rallied from lows of below $48 per barrel in the first week of May.