Saudi Arabia and Iran patch up political differences and OPEC surprised the market with an agreement to reduce the bloc’s combined output to 32.5mn barrels per day, a reduction of about 750,000 barrels per day. It was an exceptional decision and the first OPEC deal in eight years.

The decision would effectively re-establish OPEC production ceilings which were abandoned a year ago. However, how much each country's production will be capped at is to be decided at the next formal OPEC meeting in November.

An invitation to join cuts could also be extended to non-OPEC countries such as Russia. It remains to be seen whether non-OPEC members would be willing to cooperate. In fact, with individual production targets not fully agreed on, there is still a risk that some OPEC members may not agree.

Apart from that, questions as when the agreement would come into effect, how compliance with the agreement will be verified and for how long the deal would remain in effect are unclear.

With too many details still left unresolved, markets turned skeptical as to the effectiveness of the deal to reduce oversupply. Goldman Sachs said it expected the OPEC deal to add $7 to $10 to oil prices in the first half of next year.

Oil prices rallied in early trading on Thursday but retreated as skepticism over the deal led to profit taking. Global benchmark Brent crude oil was down 60 cents a barrel at $48.09 by 0850 GMT, after earlier climbing to a high of $49.09, its strongest since Sept. 9.