Non-OPEC oil states agree to cuts in ‘his­toric’ deal

Kuwait Times - - BUSINESS -

VI­ENNA: Eleven coun­tries agreed on Saturday to cut their oil out­put, team­ing up with the OPEC car­tel in an ex­cep­tional bid to end the world’s glut of crude and re­verse a dra­matic fall in in­come.

Rus­sia and 10 other non-OPEC states will re­duce their pro­duc­tion by more than half a mil­lion bar­rels per day (bpd), OPEC an­nounced. The deal will take ef­fect from the start of 2017 and last for six months, though it may be ex­tended de­pend­ing on mar­ket con­di­tions.

“I am happy to an­nounce that a his­toric agree­ment has been reached,” said Qatar’s En­ergy Min­is­ter Mo­hammed Bin Saleh Al-Sada, whose coun­try holds the OPEC ro­tat­ing pres­i­dency of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC). The cut will con­trib­ute to OPEC’s own ini­tia­tive to ease a sat­u­rated mar­ket and end a price slump that has bru­tally af­fected the economies of many oil pro­duc­ers. On Novem­ber 30 its mem­bers an­nounced a slash in out­put by 1.2 mil­lion bar­rels per day (bpd) be­gin­ning in Jan­uary, to 32.5 mil­lion bpd.

Un­der that deal, OPEC sought for non-mem­ber pro­ducer states to lower their out­put by 600,000 bpd. Saturday’s deal ap­proves cuts to­talling 558,000 bpd. Rus­sia had al­ready sig­nalled it would pro­vide half of that pro­duc­tion cut in the first half of 2017. The other coun­tries which will con­trib­ute cuts are Mex­ico, Kaza­khstan, Malaysia, Oman, Azer­bai­jan, Bahrain, Equa­to­rial Guinea, Su­dan, South Su­dan and Brunei.

“This is a truly his­toric event, the first time that so many oil-pro­duc­ing coun­tries are meet­ing in one room, to ac­com­plish what we’ve done,” Rus­sian En­ergy Min­is­ter Alexan­der No­vak told a press con­fer­ence. “In the room we had more than half of the global oil” pro­duc­tion, he en­thused.

In a state­ment fol­low­ing the meet­ing OPEC said the other oil gi­ants were work­ing “to achieve oil mar­ket sta­bil­ity in the in­ter­est of all oil pro­duc­ers and con­sumers.”

A mon­i­tor­ing com­mit­tee, com­pris­ing three OPEC and two non-OPEC mem­bers, will now be set up. Sada said OPEC would con­tinue its ef­forts to per­suade non-OPEC pro­duc­ers to join the re­duc­tion ef­fort.

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