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OPEC agrees first output cut since 2008, Saudis to take 'big hit'

Reuters  |  VIENNA 

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - has agreed its first limit on output since 2008, sources in the producer group told Reuters, with accepting "a big hit" on its production and agreeing to arch-rival freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel after Riyadh signalled it had finally reached a compromise with after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed on a proposal by member Algeria to reduce production by around 4.5 percent, or about 1.2 million barrels per day.

would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while would freeze output at close to current levels of 3.797 million bpd and other members would also cut production.

The source added that had also suspended Indonesia from and hence the exact combined reduction was yet to be calculated. The was still ongoing after around six hours of debate.

"has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global glut," said watcher Amrita Sen from Energy Aspects.

Before the meeting, Saudi Energy Minister Khalid al-Falih said was indeed focusing on significant cuts and hoped Russia and other non-producers would contribute a reduction of another 0.6 million bpd.

"It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017," Falih said.

Clashes between and have dominated many previous meetings.

But the tone changed on Wednesday with Iranian Minister Bijan Zanganeh saying he was positive since had not been asked to cut output.

He also said Russia was ready to reduce production.

"Moscow have agreed to reduce their production and cut after our decision," Zanganeh said.

NON-CONTRIBUTIONS

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output in an effort to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when increased output.

Sources said that out of additional non-cuts of 0.6 million bpd, expected Russia to cut by 0.4 million. A Russian ministry source said the figure was "a bit excessive".

member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

"If you get this deal done, it would be huge. You remove a lot of from the market and you get the Russian participation," said veteran watcher and founder of Pira consultancy Gary Ross.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, is like (the late U.S.) President (Ronald) Reagan used to say: 'Trust but verify'."

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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OPEC agrees first output cut since 2008, Saudis to take 'big hit'

VIENNA (Reuters) - OPEC has agreed its first limit on oil output since 2008, sources in the producer group told Reuters, with Saudi Arabia accepting "a big hit" on its production and agreeing to arch-rival Iran freezing output at pre-sanctions levels.

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - has agreed its first limit on output since 2008, sources in the producer group told Reuters, with accepting "a big hit" on its production and agreeing to arch-rival freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel after Riyadh signalled it had finally reached a compromise with after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed on a proposal by member Algeria to reduce production by around 4.5 percent, or about 1.2 million barrels per day.

would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while would freeze output at close to current levels of 3.797 million bpd and other members would also cut production.

The source added that had also suspended Indonesia from and hence the exact combined reduction was yet to be calculated. The was still ongoing after around six hours of debate.

"has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global glut," said watcher Amrita Sen from Energy Aspects.

Before the meeting, Saudi Energy Minister Khalid al-Falih said was indeed focusing on significant cuts and hoped Russia and other non-producers would contribute a reduction of another 0.6 million bpd.

"It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017," Falih said.

Clashes between and have dominated many previous meetings.

But the tone changed on Wednesday with Iranian Minister Bijan Zanganeh saying he was positive since had not been asked to cut output.

He also said Russia was ready to reduce production.

"Moscow have agreed to reduce their production and cut after our decision," Zanganeh said.

NON-CONTRIBUTIONS

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output in an effort to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when increased output.

Sources said that out of additional non-cuts of 0.6 million bpd, expected Russia to cut by 0.4 million. A Russian ministry source said the figure was "a bit excessive".

member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

"If you get this deal done, it would be huge. You remove a lot of from the market and you get the Russian participation," said veteran watcher and founder of Pira consultancy Gary Ross.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, is like (the late U.S.) President (Ronald) Reagan used to say: 'Trust but verify'."

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

OPEC agrees first output cut since 2008, Saudis to take 'big hit'

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - has agreed its first limit on output since 2008, sources in the producer group told Reuters, with accepting "a big hit" on its production and agreeing to arch-rival freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel after Riyadh signalled it had finally reached a compromise with after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed on a proposal by member Algeria to reduce production by around 4.5 percent, or about 1.2 million barrels per day.

would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while would freeze output at close to current levels of 3.797 million bpd and other members would also cut production.

The source added that had also suspended Indonesia from and hence the exact combined reduction was yet to be calculated. The was still ongoing after around six hours of debate.

"has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global glut," said watcher Amrita Sen from Energy Aspects.

Before the meeting, Saudi Energy Minister Khalid al-Falih said was indeed focusing on significant cuts and hoped Russia and other non-producers would contribute a reduction of another 0.6 million bpd.

"It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017," Falih said.

Clashes between and have dominated many previous meetings.

But the tone changed on Wednesday with Iranian Minister Bijan Zanganeh saying he was positive since had not been asked to cut output.

He also said Russia was ready to reduce production.

"Moscow have agreed to reduce their production and cut after our decision," Zanganeh said.

NON-CONTRIBUTIONS

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output in an effort to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when increased output.

Sources said that out of additional non-cuts of 0.6 million bpd, expected Russia to cut by 0.4 million. A Russian ministry source said the figure was "a bit excessive".

member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

"If you get this deal done, it would be huge. You remove a lot of from the market and you get the Russian participation," said veteran watcher and founder of Pira consultancy Gary Ross.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, is like (the late U.S.) President (Ronald) Reagan used to say: 'Trust but verify'."

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

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