Governor in North Sea firm warning but oil prices soars as Opec agree to cut production

Scotland’s North Sea oil and gas businesses may still face stormy waters ahead despite an “impressive” reaction to a prolonged period of record low global oil prices, the governor of the Bank of England has warned.

Governor Mark Carney cautioned that while he did not want to underplay the difficulties facing the industry in the current climate, the “reaction of the North Sea oil and gas sector has been “impressive in terms of reductions in costs”.

“Amid dark clouds, there have been some rays of sunlight”, he added.

But warned: “It is a challenging environment and, given global prices, that may persist for some time.”

Mr Carney was speaking as Opec leaders were thrashing out a preliminary deal to cut production for the first time in eight years.

The talks in Algeria sent crude prices surging, with Brent crude, the international benchmark for oil, rising almost 6 per cent to nearly $49 a barrel on the news.

“Opec made an exceptional decision today,” Iran’s Oil Minister Bijan Zanganeh said.

The major oil exporting nations struck the deal on Wednesday to ease fears of oversupply.

While oil saw only small gains in early Asian trade, energy firms across the region soared.

Oil ministers said full details of the agreement would be finalised at a formal Opec meeting in November but it is understood that output will fall by about 700,000 barrels a day, although the cuts will not be distributed evenly across the cartel, with Iran being allowed to increase production.

Disagreements between Iran and its regional rival Saudi Arabia had thwarted earlier attempts to reach a deal.

This week industry body Oil & Gas UK said that 120,000 people working in the North Sea are thought to have lost their jobs over the past two years as prices plunged.

However, it also revealed oil and gas production rose by 10.4 per cent in 2015 – the first increase in 15 years.