OPEC Agrees To Cut Oil Production By 1.2 Million Barrels A Day: First Output Cut Since 2008
Wednesday, 30 November 2016 The much anticipated headline is out and, as Bloomberg reports, OPEC has reached a deal agreeing to cut oil production by 1.2 million barrels per day to 32.5mmbpd from the current level of 33.6mmbpd, according to a delegate. This would be OPEC's first production cut since 2008.
· OPEC REACHES AGREEMENT TO CUT OIL OUTPUT: DELEGATE
· OPEC AGREES TO CUT OUTPUT BY 1.2M B/D TO 32.5M B/D: DELEGATE
Saudi Arabia, Iraq and Iran appear to have resolved their differences over production cuts for the time being, with the Saudis accepting that Iran can raise production to about 3.9 million barrels a day. However, in a potential twist, the agreement is also likely to include a reduction of about 600,000 barrels a day by non-OPEC countries according to Bloomberg. This means that there is an element of conditionality to the deal should Non-OPEC nations balk when they sit down with OPEC members next to discuss the final deal framework.
We now await the details of who will cut and by how much, how will the production cuts be implemented and supervised, and whether the deal is conditional on Non-OPEC, mostly Russia, participation. Having soared over 7% in advance of the announcement, crude remained near its highs of the day. The front-month Brent contract also resumes climb, trading $3.55 higher at $49.93.
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