The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut supply by 1.2 million barrels per day (bpd) to 32.5 million barrels, the head of the organization announced.
Ahead of the official announcement, Bloomberg broke the news, quoting an unnamed delegate in Vienna. Crude prices soared more than 7 percent on the report.
As of 16:29 GMT, Brent crude was trading at nearly $50 per barrel, while US crude benchmark WTI was above $48.
Calling the decision “historic,” the organization said the output cut would be in effect from January 1, 2017.
The deal was reached after weeks of negotiations, as Saudi Arabia, Iraq and Iran fought for the very last barrel of production. This is the first coordinated cut from OPEC in eight years.
According to the new agreement, Saudi Arabia will reduce its production by 486,000 bpd, the official announced.
Ministers of Iraq and Kuwait said their countries would reduce supplies by 209,000 bpd and 130,000 bpd respectively.
Meanwhile, Indonesia has suspended its OPEC membership and is not taking part in the reduction.
The agreement also expects non-OPEC countries to cut about 600,000 bpd.
Russian Energy Minister Aleksandr Novak welcomed the OPEC decision, saying Moscow would contribute its part if the organization keeps to its commitments.
“The voluntary restriction of production on the part of Russia is linked to the level of OPEC compliance with 32.5 million barrels a day, with adjustment for Indonesia, as well as the maximum participation of the countries who are not members of OPEC,” Novak said.
Russia, the biggest non-OPEC producer, was not participating in the Wednesday meeting, but also committed to cut oil production by 300,000 bpd, President of the OPEC Conference Mohammed bin Saleh al-Sada announced.
In October, Russia pumped 11.2 million bpd, the highest volume since the collapse of the Soviet Union.
“The agreement also expects non-OPEC countries to cut about 600,000 bpd.”
what happens when you assume?
“The deal was reached after weeks of negotiations, as Saudi Arabia, Iraq and Iran fought for the very last barrel of production. This is the first coordinated cut from OPEC in eight years.”
every barrel is precious eh?