ASX-listed oil stocks have posted strong gains in early trading, driving the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) up 0.7%.
That comes after the Organisation of Petroleum Exporting Countries (OPEC) announced an agreement to cut production of oil for the first time in eight years. Non-OPEC member Russia has also agreed to cut production.
Frankly, the country members of OPEC didn't have much choice. They have all relied on oil prices to drive their economies for decades, and several countries were going backwards with oil prices in the US$40 to US$50 a barrel range.
They needed oil prices higher, and benchmark prices surged overnight. WTI oil gained 9.6% to US$49.57 a barrel, and Brent Crude rose 8.6% to US$50.36 a barrel.
Oil-related stocks on the ASX have jumped as a result.
| Company | Share Price | Market Cap ($m) | Price change |
| Sundance Energy Australia Ltd (ASX: SEA) | $0.20 | $256.1 | 17.1% |
| Liquefied Natural Gas Ltd (ASX: LNG) | $0.70 | $357.7 | 13.8% |
| Beach Energy Ltd (ASX: BPT) | $0.89 | $1,654.3 | 10.9% |
| Santos Ltd (ASX: STO) | $4.33 | $7,689.7 | 10.2% |
| AWE Limited (ASX: AWE) | $0.66 | $348.6 | 10.0% |
| Oil Search Limited (ASX: OSH) | $7.00 | $10,658.8 | 8.5% |
| Worleyparsons Limited (ASX: WOR) | $9.47 | $2,333.8 | 9.5% |
| 88 Energy Ltd (ASX: 88E) | $0.04 | $162.6 | 8.3% |
| Karoon Gas Australia Limited (ASX: KAR) | $1.99 | $487.9 | 6.7% |
| Origin Energy Ltd (ASX: ORG) | $6.36 | $11,160.3 | 7.1% |
| Cooper Energy Ltd. (ASX: COE) | $0.34 | $227.3 | 6.2% |
| Woodside Petroleum Limited (ASX: WPL) | $31.25 | $26,326.4 | 5.5% |
| BHP Billiton Limited (ASX: BHP) | $25.57 | $130,025.6 | 4.8% |
| Senex Energy Ltd (ASX: SXY) | $0.26 | $296.7 | 4.9% |
| FAR Ltd (ASX: FAR) | $0.07 | $303.4 | 4.6% |
Source: Google Finance
The problem energy stocks and OPEC countries face is that as oil prices increase, an increasing number of higher-cost producers like US shale drillers can restart production, increasing global supply and negatively impacting on the oil price.
OPEC may have won a battle today, but it's unlikely that they have won the war. I wouldn't be surprised to see the oil cartel forced to cut production again.
