OPEC to make larger production cuts than expected
Group and allies will cut 1.2mn barrels per day of production in 2019
OPEC nations will reduce oil production by 800,000 barrels per day (bpd) after Iran agreed during long talks at Vienna. Meanwhile, non-OPEC producers will cut production by 400,000 bpd. Bloomberg reported that Iran says it has secured an exemption from cuts due to US sanctions against the country.
“A production cut of 1.2 million bpd would tighten the oil market by the third quarter of 2019 and cause prices to rise back above $70 per barrel for Brent," said
Ann-Louise Hittle, vice president, macro oils, at Wood Mackenzie. "It would help producers contend with the strength of US supply growth in 2019 when we expect a year-on-year increase of 2.4 million bpd in non-OPEC production as US supply continues to gain sharply.
Russia was a key broker at the talks. “I’m confident that our resolve, that our professionalism and our willingness to achieve results is as strong as ever,” Russian Energy Minister Alexander Novak reportedly said of the OPEC+ coalition. “In current conditions it’s extremely important to send a strong signal to the market.”
US President Donald Trump urged OPEC to avoid cuts in a tweet ahead of the talks, and has not commented on the deal as of writing.