OPEC reaches pre­lim­i­nary ac­cord to curb oil pro­duc­tion

Jamaica Gleaner - - BUSINESS - – AP

OPEC NA­TIONS reached a pre­lim­i­nary agree­ment on Wed­nes­day to curb oil pro­duc­tion for the first time since the global fi­nan­cial cri­sis eight years ago, push­ing up prices that had sunken over the past two years and weak­ened the economies of oil-pro­duc­ing na­tions.

Mo­hammed Bin Saleh AlSada, Qatar’s en­ergy min­is­ter and cur­rent pres­i­dent of OPEC, an­nounced the deal af­ter sev­eral hours of talks in the Al­ge­rian cap­i­tal. The lev­els must still be fi­nalised at an OPEC meet­ing in Vi­enna in Novem­ber.

The pre­lim­i­nary deal will limit out­put from the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries to be­tween 32.5 mil­lion and 33 mil­lion bar­rels per day, he said. Cur­rent out­put is es­ti­mated at 33.2 mil­lion bar­rels per day.

Bench­mark United States crude jumped US$2.38, or 5.3 per cent, to US$47.05 a bar­rel in New York. Brent crude, the in­ter­na­tional stan­dard, was up US$2.72, or 5.9 per cent, to US$48.69 a bar­rel in Lon­don.

Long-run­ning dis­agree­ments be­tween re­gional ri­vals Saudi Ara­bia and Iran had dimmed hopes for a deal at Wed­nes­day’s talks.

Iran had been re­sis­tant to cut­ting pro­duc­tion, as it is try­ing to re­store its oil in­dus­try since emerg­ing from in­ter­na­tional sanc­tions over its nu­clear pro­gram ear­lier this year. Ac­cord­ing to Wed­nes­day’s deal, Iran ex­cep­tion­ally will be al­lowed to in­crease pro­duc­tion to 3.7 mil­lion bar­rels a day, ac­cord­ing to Al­ge­rian par­tic­i­pants at the meet­ing. It is cur­rently es­ti­mated to be pump­ing around 3.6 mil­lion.

The OPEC of­fi­cials met in­for­mally on the side­lines of an en­ergy con­fer­ence in Al­giers to try to find com­mon ground on how to sup­port oil mar­kets.


“We reached a very pos­i­tive deal,” said Nige­rian Oil Min­is­ter Emmanuel Ibe Kachikwu. He said all coun­tries will re­duce out­put but the spe­cific quo­tas will be set in Vi­enna in Novem­ber.

Ear­lier, Ira­nian Pe­tro­leum Min­is­ter Bi­jan Nam­dar Zan­ganeh had played down the OPEC gath­er­ing, call­ing it “just a con­sul­ta­tion meet­ing”.

The price of crude oil has fallen Out­side view of In­ter­na­tional Con­fer­ence Cen­ter in Al­giers, Al­ge­ria, where en­ergy min­is­ters from OPEC and other oil-pro­duc­ing coun­tries are gath­ered to at­tend the open­ing ses­sion of the 15th In­ter­na­tional En­ergy Fo­rum Min­is­te­rial meet­ing in Al­giers, Al­ge­ria. sharply since mid-2014, when it was over US$100 a bar­rel, dropping be­low US$30 at the start of this year.

Saudi Ara­bia, the world’s big­gest oil pro­ducer and Iran’s ri­val for power in the Mid­dle East, ap­peared to be more amenable to some sort of pro­duc­tion limit, cer­tainly more so than in April when OPEC failed to agree on mea­sures to curb sup­plies.

Saudi En­ergy Min­is­ter Khalid Al-Falih this week promised to “sup­port any de­ci­sion aimed at sta­bil­is­ing the mar­ket”.

Over the past cou­ple of years, OPEC coun­tries, led by Saudi Ara­bia, had been will­ing to let the oil price drop as a means of driv­ing some US shale oil and gas pro­duc­ers out of busi­ness. Shale oil and gas re­quires a higher price to break even.

Those lower prices have hurt many oil-pro­duc­ing na­tions hard, par­tic­u­larly OPEC mem­bers Venezuela and Nige­ria, but also Russia and Brazil.

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