OPEC Cuts Production in First Agreement Since 2008

Khalid Al-Falih/Getty Images

At the Organization of the Petroleum Exporting Countries (OPEC) Meeting on November 30 in Vienna, it was agreed upon that overall production would be cut by 1.2 million barrels a day, pushing oil prices up by almost 10%, above $50 a barrel.

OPEC produces a third of global oil, or around 33.6 million barrels per day, and under the deal it would reduce output by around 1.2 million bpd.

The agreement, the first since 2008, will see most OPEC countries slash their production by around 4.6%. Saudi Arabia, the group’s biggest producer, will see its output decline by almost 500,000 barrels a day.

“I think it is a good day for the oil markets, it is a good day for the industry and … it should be a good day for the global economy,” said Saudi Energy Minister Khalid al-Falih. “I think it will be a boost to global economic growth,” he told reporters after the decision.”

Indonesia, the cartel’s only Asian member, said it would suspend its membership as it wasn’t willing to cut its production as agreed by OPEC, refusing to cut around 5 percent of its production or around 37,000 barrels per day.

Many skeptics had said the Iran and Russia would struggle to find a compromise but non-OPEC member Russia decided to join output cuts for the first time in 15 years to help OPEC boost oil prices, they are willing to cut production by 300,000 barrels a day.

“OPEC is still OPEC,” al-Falih said. “Today’s unity is a very explicit sign about the position of OPEC.”

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