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Gulf Arab shares surge following OPEC production cut deal

Xinhua, December 5, 2016 Adjust font size:

Stock markets from Riyadh to Dubai posted gains on Sunday following last Wednesday's decision by 13 OPEC member states to cut daily oil production by 1.2 million barrels per day (bpd), the first reduction deal in eight years.

The Saudi Stock Exchange reached a one-year high by rising another 0.52 percent, hitting 7,130.34 points.

The price of oil climbed from 45 U.S. dollars per barrel to 51.73 dollars, after OPEC member states and oil exporting non-member states agreed on Nov. 30 to cut daily production to 32.5 million bpd, encouraging investors that the two-year rout in the hydro-carbon market is finally over.

The deal was possibly clinched particularly as OPEC member Saudi Arabia and non-member oil exporting Russia joined forces.

"Whether prices remain elevated will depend on OPEC implementing its agreement with discipline as well as no major rises in US shale oil supply," said Dr. Fahad Al-Turki, Chief Economist at the Riyadh-based Jadwa Research in an e-mailed statement.

The Dubai Financial Market (DFM) General Index gained over 2 percent upon opening and eventually closed 1.67 percent higher at 3,417.05.

Sunday marked the first trading in Dubai, United Arab Emirates (UAE), after the Gulf state observed a long weekend due to "Martyrs Day" on Nov. 30 and UAE National Day on Dec. 2.

At the DFM, Syrian retail trader Ellie M. told Xinhua that "the market surge is not only due to the OPEC deal which pushed up the price of oil, inflating stock prices. It is also because investors receive their salaries at the beginning of the month."

He added that he would remain cautious.

The FTSE Nasdaq Dubai UAE 20 Index added 0.60 percent to reach 3,139.60. The Qatari QE 20 Index in Doha added 0.97 percent.

However, the Abu Dhabi market gauge ADXGI failed to join the rally and closed 1.09 percent lower at 4,261.86.

Seven percent of the world's known oil reserves are located in Abu Dhabi. Endit