Oil producers join forces and agree to cut production again
terest ultimately prevails,” she said. “Saudi Arabia has a longterm goal of managing the oil market to avoid the sharp falls and spikes which hurt demand and the ability of the industry to develop supply. On top of this, Saudi Arabia also needs higher oil revenues to fund domestic Saudi spending.”
Russian Energy Minister Alexander Novak called the negotiations with the OPEC nations “fairly challenging” but said the decision “should help the market reach a balanced state.”
“I think this is a strong signal to anybody who has doubted it that our cooperation is continuing and we can react to any challenge the market throws at us,” he said in Russian through a translator.
OPEC’s reliance on non-members like Russia highlights the cartel’s waning influence in oil markets, which it had dominated for decades. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States’ vastly increased production of oil in recent years. By some estimates, the U.S. this year became the world’s top crude producer.
The cut is unlikely to be greeted warmly by U.S. President Trump, who has been pressuring the cartel publicly to maintain production. On Wednesday, he tweeted: “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
One stumbling block to an agreement had been Iran, Saudi Arabia’s regional rival and fellow OPEC member, which had been arguing for an exemption to any cuts because its crude exports are already being pinched already by U.S. sanctions.
Al-Mazrouei said that in the end Iran had been given an exemption, as well as Venezuela and Libya.
That “means that the percentage we will contribute among us is going to be a bit higher,” he said.