TEHRAN (Basirat)- oil production cuts will begin in January 2017 as earlier in the day OPEC reached a breakthrough deal to reduce oil output by 1.2 million barrels per day.
"Starting January 1 the next year," Saudi Arabia’s Minister of
Energy, Industry and Mineral Resources Khalid A. Al-Falih said when
asked by reporters.
Earlier in the day, OPEC countries agreed to cut oil production by 1.2
million barrels a day to 32.5 million a day. Oil prices surged following
the news. As of 9am (EST), Brent crude showed an 9.49% hike and was
trading over $51.
"The agreement that OPEC reduces approx. 1.2 million barrels a day
to bring its ceiling to 32.5 million barrels per day effective first of
January 2017," OPEC conference president Mohammed Bin Saleh Sada, the
Qatari energy minister, told during a press conference.
The OPEC president commented on the deal, saying that the agreement was
reached with understanding and cooperation from all OPEC member-states.
He said that the deal will be valid for half a year; later it will be
reviewed. The UAE oil minister said that OPEC reached a "very good
agreement" on oil production cuts.
"We reached an agreement and as we've told you it is very good," UAE Minister of Energy Suhail Mohamed Al Mazrouei said.
Moreover, OPEC has created a monitoring committee on the implementation of the deal comprising Kuwait, Venezuela and Algeria.
The OPEC president said that Saudi Arabia will cut oil production by 486,000 barrels a day, according to the deal.
According to the Nigerian oil minister, Russia and other non-OPEC states
are expected to participate in oil production cuts as well. The OPEC
president confirmed the information and said that Russia agreed to cut
oil production by 300,000 barrels a day.
"I'm glad to report that Russian Federation already committed to reduce 300,000 barrels [per day]," Sada said.
"They [will] announce, the minister Novak. Yesterday we were talking
with him and they announced 300,000 barrels per day from Russia only,
but we are expecting from other non-OPEC countries 300,000 barrels per
day," Venezuelan Oil and Mining Affairs Minister Eulogio del Pino told
reporters.The petroleum minister of Iran, which is not an OPEC member, said
that he is "very happy" over the reached deal. "I'm very happy [with the
OPEC deal]," Iran’s Minister of Petroleum Bijan Namdar Zanganeh told
reporters after the OPEC meeting.
Russian President Vladimir Putin (left) and President of the Islamic
Republic of Iran Hassan Rouhani at a news conference following the
Russian-Iranian talks in Tehran (File)
© Sputnik/ Sergey Guneev
Putin, Iranian President Rouhani Discuss Cooperation in Oil Sector -
Kremlin
Iran is the only OPEC member that will boost its daily oil output under a
new OPEC oil production deal reached on Wednesday, according to an OPEC
press release. A table on adjustments included in the press release
shows that Iran will increase it oil production by 90,000 barrels per
day to 3.79 million bpd.
Many non-OPEC states are ready to cut their oil production by a total of 600,000 barrels a day, the OPEC president said.
"This agreement has been reached following extensive consultations and
understanding reached with key non-OPEC countries, including the Russian
Federation that they contribute by a reduction of 600 tb/d production."
raq will cut oil production by 200,000 barrels a day, the OPEC
president said. Libya's and Nigeria's oil production have not been taken
into account by the deal.
The UAE by 139,000 barrels a day, according to the deal.
The Nigerian minister confirmed earlier media reports that
Indonesia has been temporarily suspended from OPEC. The OPEC president
said that Indonesia will not participate in the oil production cuts
deal.
Saudi Arabia's minister will be the next OPEC president, the
organization said. The next meeting of the Organization of the Petroleum
Exporting Countries (OPEC) will take place on May 25, the organization
said in a statement Wednesday.
n September, OPEC members reached a preliminary deal in Algeria to cap oil production at 32.5-33 million barrels per day.
Oil market turbulence caused oil prices to plunge from $115 per barrel
in June 2014 to less than $30 per barrel in January 2016, causing
hardship for oil exporters and placing a number of global oil producers
at risk of bankruptcy. Since then, prices have slightly increased and
are currently at $45-50 per barrel.
The previous oil producers' talks to freeze output failed in April
after Iran refused to limit its output, prompting Saudi Arabia to pull
out as well. Under the new deal, Iran has been granted exemptions from
production cuts alongside Libya and Nigeria.