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OPEC in first joint oil cut with Russia since 2001, Saudis take 'big hit'

Reuters  |  VIENNA 

By Rania El Gamal, Alex Lawler and Ahmad Ghaddar

VIENNA (Reuters) - agreed on Wednesday its first output cuts since 2008 after accepted "a big hit" on its production and dropped its demand on arch-rival to slash output.

Non-will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up prices.

Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with and after fast-growing producer Iraq also agreed to curtail its booming output.

"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 consultancy Energy Aspects.

Saudi Energy Minister Khalid al-Falih said ahead of the that the kingdom was prepared to accept "a big hit" on production to get a deal done.

"I think it is a good day for the markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.

will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf allies - the United Arab Emirates, Kuwait and Qatar - would cut by a total 0.3 million bpd.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production - by 0.2 million bpd.

was allowed to boost production slightly from its October level - a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.

Clashes between and dominated many previous meetings.

"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.

He said could rise to $55 per barrel.

WILL COMPLY?

Falih had long insisted would do an output-limiting deal only if non-producers contributed.

president Qatar said non-producers had agreed to reduce output by a further 0.6 million bpd, of which would contribute some 0.3 million.

Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.

A combined output reduction of 1.8 million bpd by and non-represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.

Non-Azerbaijan and Kazakhstan have said they might also cut.

suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.

The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.

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'."

will hold talks with non-producers on Dec. 9. The organisation will also have its next on May 25 to monitor the deal and could extend it for six months, Qatar said.

(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 in first joint oil cut with Russia since 2001, Saudis take 'big hit'

VIENNA (Reuters) - OPEC agreed on Wednesday its first oil output cuts since 2008 after Saudi Arabia accepted "a big hit" on its production and dropped its demand on arch-rival Iran to slash output.

By Rania El Gamal, Alex Lawler and Ahmad Ghaddar

VIENNA (Reuters) - agreed on Wednesday its first output cuts since 2008 after accepted "a big hit" on its production and dropped its demand on arch-rival to slash output.

Non-will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up prices.

Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with and after fast-growing producer Iraq also agreed to curtail its booming output.

"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 consultancy Energy Aspects.

Saudi Energy Minister Khalid al-Falih said ahead of the that the kingdom was prepared to accept "a big hit" on production to get a deal done.

"I think it is a good day for the markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.

will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf allies - the United Arab Emirates, Kuwait and Qatar - would cut by a total 0.3 million bpd.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production - by 0.2 million bpd.

was allowed to boost production slightly from its October level - a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.

Clashes between and dominated many previous meetings.

"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.

He said could rise to $55 per barrel.

WILL COMPLY?

Falih had long insisted would do an output-limiting deal only if non-producers contributed.

president Qatar said non-producers had agreed to reduce output by a further 0.6 million bpd, of which would contribute some 0.3 million.

Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.

A combined output reduction of 1.8 million bpd by and non-represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.

Non-Azerbaijan and Kazakhstan have said they might also cut.

suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.

The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.

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'."

will hold talks with non-producers on Dec. 9. The organisation will also have its next on May 25 to monitor the deal and could extend it for six months, Qatar said.

(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 in first joint oil cut with Russia since 2001, Saudis take 'big hit'

By Rania El Gamal, Alex Lawler and Ahmad Ghaddar

VIENNA (Reuters) - agreed on Wednesday its first output cuts since 2008 after accepted "a big hit" on its production and dropped its demand on arch-rival to slash output.

Non-will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up prices.

Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with and after fast-growing producer Iraq also agreed to curtail its booming output.

"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 consultancy Energy Aspects.

Saudi Energy Minister Khalid al-Falih said ahead of the that the kingdom was prepared to accept "a big hit" on production to get a deal done.

"I think it is a good day for the markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.

will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf allies - the United Arab Emirates, Kuwait and Qatar - would cut by a total 0.3 million bpd.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production - by 0.2 million bpd.

was allowed to boost production slightly from its October level - a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.

Clashes between and dominated many previous meetings.

"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.

He said could rise to $55 per barrel.

WILL COMPLY?

Falih had long insisted would do an output-limiting deal only if non-producers contributed.

president Qatar said non-producers had agreed to reduce output by a further 0.6 million bpd, of which would contribute some 0.3 million.

Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.

A combined output reduction of 1.8 million bpd by and non-represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.

Non-Azerbaijan and Kazakhstan have said they might also cut.

suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.

The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.

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'."

will hold talks with non-producers on Dec. 9. The organisation will also have its next on May 25 to monitor the deal and could extend it for six months, Qatar said.

(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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