OPEC has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd at the conclusion of its 171st meeting of ministers. If carried out from January, this would be its first cut in eight years.
The oil futures market, which registered a slump of 4% overnight, rallied in response registering a rise of over 8%.
However, the crude reality is that much of the above cut - i.e. 486,000 bpd - will come from the Saudis. As the Oilholic's report for IBTimes UK outlines, others will pitch in too. OPEC also said it would be counting on 600,000 bpd of non-OPEC cuts, bulk of which would come from Russia. That's where the real riddle is. What sort of compliance will we see from Russia?
However, the crude reality is that much of the above cut - i.e. 486,000 bpd - will come from the Saudis. As the Oilholic's report for IBTimes UK outlines, others will pitch in too. OPEC also said it would be counting on 600,000 bpd of non-OPEC cuts, bulk of which would come from Russia. That's where the real riddle is. What sort of compliance will we see from Russia?
Furthermore, what about internal compliance within OPEC? Mohammed Bin Saleh Al Sada, Qatar's Minister of Energy and Opec President, said a ministerial monitoring committee chaired by Kuwait, along with Venezuela and Algeria would be established to monitor the cuts.
Al Sada also described the decision as "historic" adding that: "We have no regrets about not having cut production in the summer of 2014. Opec has reacted to current oil market realities in taking this decision and delivered on what we agreed in September [at the International Energy Forum in Algiers].
More from Vienna shortly folks, once yours truly has digested this crude bit of news! Keep reading,
keep it ‘crude’!
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© Gaurav Sharma 2016. Photo: Mohammed Bin Saleh Al Sada (left), Qatar's
Minister of Energy and Opec President unveils an oil production cut of
1.2m barrels per day at the conclusion of its 171st meeting of
ministers' in Vienna, Austria on 30 November, 2016. © Gaurav Sharma, November 30, 2016.
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