Non-OPEC countries agree to cut oil production by 558,000 barrels per day
Non-OPEC countries agreed to cut oil production by 558,000 barrels per day (b/d) during a meeting with members of the Organization of Petroleum Exporting Countries (OPEC) in Vienna.
Among the non-OPEC participants at the meeting were 12 oil exporting countries – Azerbaijan, Oman, Mexico, Sudan, South Sudan, Bahrain, Malaysia, Equatorial Guinea, Bolivia, Kazakhstan and Russia.
The 558,000 b/d figure was voiced by Qatar's energy minister at a press conference following the six hour long talks.
OPEC members also confirmed their commitment to the plan to reduce the oil supply by 1.2 million b/d. This, together with the commitments made by non-OPEC states, would lead to the total reduction of oil production by about 1.7-1.8 million b/d, Russian Energy Minister Aleksandr Novak said at the press conference.
Saudi Minister of Energy, Industry and Mineral Resources Khalid Al-Falih told the press conference that 2017 would be a “good year” for the global oil market.
The parties to the negotiations also agreed to form a special group to monitor the observance of the agreement both by the OPEC and non-OPEC countries. The group would consist of three OPEC members and two non-OPEC countries, Novak said.
"This agreement cements and prepares us for long-term cooperation," Saudi Energy Minister Khalid al-Falih told reporters after the meeting, calling the deal "historic".
"Today's deal will speed up the oil market stabilisation, reduce volatility, attract new investments," Novak said.
The deal became the first such agreement between OPEC and non-OPEC countries since 2001. In April, OPEC and Russia tried to reach a deal on oil production which was cut during negotiations in Doha, but failed to come to an agreement, as Saudi Arabia sunk the deal at the last moment.
OPEC made a decision to cut its own output on November 30.
Following the decision, Saudi Arabia informed its customers in Europe and North America that it would cut its oil supply in January. According to PIRA Energy Group chairman Gary Ross, buyers of Saudi oil were informed that Riyadh wants to cut its production by 486,000 b/d to just over 10 million.
UAE then followed suit and also announced that it would take similar action.
While some non-OPEC countries are also expected to cut their oil production in January, others have said they might wait until October.
OPEC’s November decision put an end to the ’pump-at-will’ policy the group has conducted since 2014, which sent oil prices down from $100 a barrel to less than $50 a barrel. Now, both OPEC and non-OPEC oil exporters are trying to push prices up.
The market reacted to the November move with rising oil prices, which went up by 17 percent after the group announced its decision. The prices continued to go up on Friday amid speculation that non-OPEC countries would agree to cuts.
The projected reduction in oil production amounting to up to 1.8 billion b/d, that is set to follow the Saturday agreement and OPEC's November decision, would account for about two percent of the current global oil supply.