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