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Opec+ makes deeper cuts in oil production

/ 04:15 AM January 05, 2020

VIENNA — The powerful Opec group of oil producers and its allies reached a deal Friday to cut production by 500,000 barrels per day (bpd) in a bid to stem prices which have been under pressure from abundant reserves and weak global economic growth.

Friday’s so-called Opec+ meeting included Russia, the world’s second-largest oil producer and not a member of the cartel.

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It ended with a deal for a cut effective as of Jan. 1 which sets an output target 1.7 million barrels per day lower than October 2018 levels, with Saudi Arabia and Russia making almost half the additional reductions between them.

In a surprise move, the bloc also announced that several participating countries, “mainly Saudi Arabia,”would make additional voluntary cuts bringing the overall cut to more than 2.1 million bpd.

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World oil prices surged in response, with US benchmark WTI and its European counterpart Brent both rising 2 percent in an initial reaction before settling down at levels around 1.3 percent higher on the day in the late European afternoon.

On Thursday, a meeting of Opec ministers had run late into the evening without a deal.

Saudi Oil Minister Prince Abdelaziz Ben Salman, who was at his first meeting in the post, said first-day talks lasting six hours saw delegations “laboring … until 11 o’clock in the evening, squashing their heads, squeezing their brains” in search of an agreement.

Earlier, Prince Abdulaziz hinted at Saudi irritation that not all countries have been sticking to the production quotas agreed under the current deal.

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TAGS: oil prices, oil production cuts, OPEC
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