OPEC will cap production at 32.5 million barrels per day (bpd) in order to boost oil prices, which have slumped in recent years. The preliminary agreement is the first since the global financial crisis started in 2008.
The preliminary deal will limit output from the Organization of the Petroleum Exporting Countries (OPEC) to between 32.5 million and 33 million bpd, with current output estimated at 33.2 million bpd, a meeting of OPEC oil ministers in Algiers agreed on Wednesday.
S&P Global Platts estimated that if OPEC cuts production by 700,000 barrels a day, prices would rise by $12 (10.69 euros) in 2017. Crude oil is currently trading under $50 a barrel compared to peak prices of well over $100 in 2014, denting Saudi Arabia’s economy, but also enabling OPEC members to regain market share from North American producers.
Saudi Arabia – which produced 10.6 million barrels per day in August – has agreed to cut production by 500,000 bpd, while Iran – which produced 3.6 million barrels, according to figures published by OPEC – will cap its output at 3.7 million bpd.
Previous efforts to freeze production failed over rows between the two major producers and political rivals.
Iran had previously insisted on returning to an output of 4 million bpd, representing its production level before the imposition of sanctions related to its nuclear program, which were lifted in 2015.
OPEC will now discuss quotas for individual member states ahead of a meeting set for November 30 in Vienna, Qatar’s Energy Minister Mohammed bin Saleh al-Sada said on Wednesday after chairing the Algiers meeting.
The agreement on production comes just weeks after the International Energy Agency said that growth in oil demand had slowed significantly during the third quarter, further suppressing crude prices.
jbh/jm (AP, dpa)