29/09/2016 World Business Report

Oil prices surge after OPEC agrees to cut production,

Does this mean a new lease on life for the divided cartel?

Plus, clearing the air, VW pledges a cleaner future as it

We hear from the boss at the Paris Motor Show.

We'll be hearing from VW's Matthias Mueller in just a moment.

This story is really moving the markets.

We start in the Algerian capital Algiers where the OPEC group of oil

producing nations have been holding talks.

They have shocked global markets by agreeing to limit oil production

The collapse in the price of crude from more than $100 a barrel to less

But infighting between them has meant no co-ordinated action

since the Global Financial Crisis eight years ago.

OPEC is proposing to limit total oil output by its members to between 32

and a half million and 33 million barrels per day.

At the moment they are pumping 33 point two million barrels a day.

So, that's a production cut of up to 700,000 barrels a day.

It's not a lot on a global level, and the details still have to be

agreed, but the news sent crude prices soaring.

Brent Crude jumped 6%, to almost $49 a barrel.

As ever with opaque it is not always very easy to understand what they

have done. -- OPEC. The devil is in the details. The comments suggest

there is a production cut coming but it is still unclear what that would

look like. Which member countries will be reducing the amount of crude

oil they produce. That will likely the decided at OPEC's next official

meeting at the end of November. Although this is tentative, it is

nevertheless very significant. This will be the first agreement to cut

production by the cartel in eight years. Clash is on oil policy,

especially between Iran and Saudi Arabia, make the likelihood of an

agreement difficult. In the last two years, the price of crude has seen

dramatic falls and the oil cartel has been under pressure to reduce

how much it was pumping. Samira Hussain, BBC News, New York.

Let's see how markets are reacting in Asia.

Rico Hizon is following them for us in Singapore.

It is nice to see you. Sally! Talk us through it. Investors are happy

at this point. Especially those with exposure in energy companies. They

are leading the rallies in Asia trade. That is after the news from

OPEC they plan to cut oil production for the first time in eight years.

Oil prices, as you can see, are also continuing to gain in Asia trade on

top of that search you mentioned in New York. It is soaring by 9.5%. And

a Chinese oil producer is jumping as well. Australia's would petroleum

leaping. And the BHP Billiton leaping as well. Across-the-board,

gains. Markets are broadly optimistic about the deal. But there

are some analysts who are sceptical. They have pointed out the further

rise in crude oil prices may be difficult because shale producers

will not be cutting in recent months and will start increasing output.

Currencies have firmed up on the news, like the Australian and

Canadian dollars. Sally. Bank is. Rico Hizon in Singapore for us.

Miswin Mahesh is an oil analyst at Barclay's.

Nice to see you. Good morning. Give us your reaction. Rico Hizon says

some people are still sceptical. We are still sceptical about it. They

still had a few days before they iron out the details that matter

because it producer has to tell the market how much they will be willing

to get off it. In terms of scale, OPEC represents 40% of production

but are only taking 1% off of global production. In that instance, one

really needs to decide how are Libya, Nigeria, and Iraq going to

react to this and if they do come up with the deal and they don't agree

by the end of November, we might be back to square one again. In terms

of the timetable, there is an OPEC meeting on November 30, where this

gets signed and sealed, we hope and assume. But there is a long time to

iron out the detail. Iran was key. Absolutely. The fact they can still

pump there oil. Give us information on that. The big discussion is

around how much will they let you run to? They are coming under

sanctions. -- Iran. Initially the big stumbling block was that they

could only do 3.8 million barrels of. Now they have given Iran an

exception. That is good news for then. Once again, the thing is that

even if they do agree in November it will only be implemented by January.

OPEC does know that by January, it will be tighter in terms of demand

in the Western Hemisphere as well. That will pick up. Briefly, Saudi

Arabia itself, we have seen signs it is under a lot of pressure, for

example, The Fall in the price of oil. Only last week it announced a

big cut in salary wages in the service for them. It yes. The points

of pain are being felt across the economy, civil servants, everything

is going down. Clearly, $50 per barrel is not working for then. So

it does seem like this effort to boost optimism in the market will

help them get a better range, 50- $60 per barrel range. To get higher

than that is difficult. We have shale to think about. We appreciate

you coming in and sharing your analysis. We will keep an eye on the

price of oil today as this continues.

To Paris now, where the Paris Motor Show is getting under way.

On Wednesday, VW unveiled its latest model, a small electric car.

It has pledged to sell between 2-3 million electric vehicles

The German car giant is struggling to draw a line under the worst

crisis in its 78-year history, after admitting using technology

in its diesel cars to cheat emissions tests.

Our correspondent, Theo Leggett, is there and has been speaking to VW

Just look at this crowd of journalists, all coming to see the

unveiling of Volkswagen's new brand new high-tech car over there. It is

a fresh start for VW. It is exactly one year the diesel emissions can do

erupted causing the company so many problems. Watch progress as it made

in sorting itself out since then? Let us go and ask the boss.

TRANSLATION: Well, undoubtedly, this company made a huge mistake. We lost

the trust of the authorities and our customers. We are in the process of

resolving the crisis. We are working very constructively with authorities

in Germany, Europe, and especially the United States. We want to get

into an agreement with the Department of Justice, hopefully

this year, so we can plan for the future with a sound base, especially

with the fines will we have to pay. Investigations will decide what the

problems were. It remains to be seen who exactly was involved. Recently,

the United States, one of your former engineers, he pleaded guilty

to four scandals related to the major scandal. It seems like a

conspiracy is. Does this concern you that it may go much wider? There are

more current and former people involved? Well, as I said before,

our lawyers are working to clarify this. They are working with the DHA

and are working flat out. At the moment I can't say if it was a

conspiracy or not. Jones has looked at 13 million documents. They are

reviewing then. And this is a very time-consuming process. We hope it

is completed as soon as possible, ideally before the end of the year,

so we can really start looking ahead. In the meantime, you are

trying to plan ahead a future with electric cars making a quarter of

your output. How difficult is it to plan for that when you don't know

how much you are going to have to pay for mistakes in the past?

TRANSLATION: I have always said that Volkswagen is about more than the

crisis. We don't want the crisis to paralyse the company. We want to

shape the automotive future and we have put in place our strategy up

until 2025. We know what we have to do. Of course, we would love to use

the money we will have to pay in fines, but we also know that

Volkswagen is a copy and robust companies. We don't need to be

afraid of the future. -- healthy. We have good prospects and are going to

make the most of them and at the end of the day we will be a leading

provider of sustainable mobility. That is the boss of VW. That is the

end of World Business Report. We will see you in a moment for a quick

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