Oil prices surge as OPEC reaches deal to cut production by 1.2 million barrels

https://www.rt.com/business/368698-opec-reaches-production-cut-deal/

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?

401

Advertisements

~ by seeker401 on December 2, 2016.

5 Responses to “Oil prices surge as OPEC reaches deal to cut production by 1.2 million barrels”

  1. Speculation driven rally.
    The BDI’s holiday bump was just as anemic as the last two years, and it looks like it’s topped out already, so shipping has not gotten any better.
    Christmas travel seems to be doing no better this year, and the winter in northern U.S. states (where oil is routinely used to heat houses) has been mild.
    The point is, when 80% of the largest market on Earth is living paycheck to paycheck, they don’t blow a lot of money on manufactured goods or travel, both of which are necessary to increase demand for oil. And if they increase the price of oil too much, people will be switching over to other energy sources to heat their homes, such as electricity, and in the U.S. that electricity is created primarily by coal-fired generating plants…and the U.S. has a million years worth of easily accessible coal (been thinking of switching over to zoned electric heating, myself…tack on a roof filled with solar panels & I pay almost nothing to heat my home, although the initial investment would be large. Maybe then I’ll raise the temperature up from 64 degrees…
    Oil is not irreplaceable, and these people will find that, yes…they CAN price themselves out of the market.

    • As long as coal can come back. I heard on the radio the other day about the dead communities near where I live in West Virginia. At the beginning of Obama’s 1st term there were about 146 coal power plants in West Virginia. Not even before his 1st term ended there were only about 40 left. The regulations from Obama through the EPA killed over half of them. These were good paying jobs. It impacts the whole community as you might expect when that much is shut down.

      • same thing here..our coal fired power stations are being shuttered for no other reason but the green religion..

      • Trump will cut those regulations, and Seeker…most of our power plants on the East coast ar coal/oil powered. If they’ve “shuttered” these power stations, where are you getting your electricity from?
        In any case, if oil rises again, coal will be the only alternative.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: