(Ecofin Agency) - In a major milestone, the organization of Petroleum Exporting Countries has for the first time in eight years agreed to reduce output to 32.5 million barrels per day from the current 33.24 million bpd.

“OPEC made an exceptional decision today. ... After two and a half years, OPEC reached consensus to manage the market,” Iranian Oil Minister Bijan Zanganeh said after the meeting in Algiers.

According to sources, the reduction in production for each country will be decided at the next OPEC meeting in Vienna on November 30.

Oil prices increased by over 5% to $48 per barrel on Wednesday after the meeting which surprised traders who had expected the group to maintain output.

Goldman Sachs has said the deal should add from $7 to $10 to oil prices in the first half of 2017.

“Strict implementation of today's deal in 2017 would represent 480,000 to 980,000 barrels per day less output. Longer term, we remain skeptical on the implementation of the proposed quotas, if ratified,” Goldman analysts told Reuters.

But the Bank kept its 2016 forecast West Texas Intermediate crude (WTI) at $43 per barrel and 2017 forecast at $53 per barrel.

“If this proposed cut is strictly enforced and supports prices, we would expect it to prove self-defeating medium term with a large drilling response around the world,” Goldman analysts said.

The International Energy Agency (IEA) has estimated that reducing production by 200,000, to 33 million barrels a day, is not sufficient in bringing production back in proportion to demand until H2 of 2017. But if OPEC reduce output by about 700,000 barrels a day, the production glut in the market would withdraw by the end of this year. The world's inventories could at that time be reduced and prices would rise.

The group has failed to agree on a production cut since 2008, after financial crisis reduced oil demand and sent prices below $40 a barrel.

Oil prices dropped below $30 a barrel this year for the first time and have been shifting between $40 and $50 for months. While this resulted in cheap energy prices for consumers, tens of thousands lost their jobs in the petroleum business, and had also weakened economies.

Anita Fatunji