The members of the Organization of the Petroleum Exporting Countries, OPEC has agreed to a cut in output at their meeting in Algeria. The cut is the first of such since 2008.
The output cuts was achieved after Saudi Arabia softening its antagonism of it’s arch-rival Iran amid mounting pressure over falling oil prices.
“OPEC made an exceptional decision today … After two and a half years, OPEC reached consensus to manage the market,” said Iranian Oil Minister Bijan Zanganeh, who had repeatedly clashed with Saudi Arabia during previous meetings.
He and other ministers said the Organization of the Petroleum Exporting Countries would reduce output to a range of 32.5-33.0 million barrels per day. OPEC estimates its current output at 33.24 million bpd.
“We have decided to decrease the production around 700,000 bpd,” Zanganeh said. The move would effectively re-establish OPEC production ceilings abandoned a year ago.
Saudi Energy Minister Khalid al-Falih said on Tuesday that Iran, Nigeria and Libya would be allowed to produce “at maximum levels that make sense” as part of any output limits.
Saudi Arabia is by far the largest OPEC producer with output of more than 10.7 million bpd, on par with Russia and the United States. Together, the three largest global producers extract a third of the world’s oil.
The market reacted positively to the OPEC’s output cut as international benchmark for oil rose almost 6% to nearly $49.
