Non-OPEC oil producers to cut output 558000 barrels a day

Posted December 11, 2016

OPEC and non-OPEC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries.

OPEC has a long history of cheating on output quotas.

Eleven oil-producing countries, who are not members of the Opec oil cartel, have agreed to cut their output to boost prices.

Should OPEC and other producers, especially Russian Federation, fail to agree a cutback, Goldman said it expected an oil supply surplus of 0.7 million barrels per day (bpd) for the first quarter of 2017. He pointed out that the OPEC and non-OPEC countries represented at the output reduction talks in Vienna account for more than half of global supplies.

OPEC decided last week to reduce its output by 1.2 million bpd from January to boost the now low prices and to increase their government revenues.

Earlier, OPEC Secretary-General Mohammed Barkindo said he was optimistic about reaching an agreement to cut 600,000 barrels "or even more maybe".

"We managed to gather 25 countries from Opec and non-Opec with the idea of stabilizing the oil market and defending a fair price for our commodity", Venezuelan Energy Minister Eulogio del Pino said before the meeting.

"Emotionally, the market will likely rally", said Mr Adam Ritchie, founder of AR Oil Consulting.

The agreement was made at a meeting at Opec's Vienna headquarters.

Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as US shale firms out of the market.

30 to cut 1.2 million barrels in daily output by its own members in an attempt to raise oil prices that have put pressure on government finances in oil-producing countries including Saudi Arabia.

"While a lot of the countries are formalizing natural declines, cuts by Russia, Kazakhstan and Oman are real".