Oil prices rose sharply on Friday, as the major oil producers, including the OPEC cartel, agreed to cut global oil production by 1.2 million barrels per day to reduce excess oil supply.
Following two days of meetings, the Organization of Petroleum Exporting Countries, including Saudi Arabia and Iraqis, announced that some countries, such as Iran, who face wide-ranging sanctions, will cut 800,000 barrels a day for six months since January. An exemption is granted from the United States.
The balance will come from Russia and other non-OPEC countries. The United States, one of the world's largest manufacturers, is not part of the agreement.
# This is a big step forward, h said Suhail Mohamed el Mazrouei, Energy Minister of the United Arab Emirates, who chaired the regular meetings in Vienna as President of the OPEC Conference. Said.
Oil producers are under pressure to reduce production after a sharp drop in oil prices in the last few months. Oil prices have recently declined by about 25 percent, because large producers, including the US, pumped oil at high rates.
The fall was met with the hopes of the ministers. Immediately after April:
- Brent crude, the international standard, fell to US $ 3,115, or 5.2% or $ 63.17 a barrel.
- Benchmark New York crude oil was $ 2.23 or 4.3 percent at $ 53.72 a barrel. And
- Western Canadian elections increased by 12 percent to $ 4.50 to $ 37.50.
- And West Texas Intermediate, $ 2.25 from $ 53.75 & # 39; He jumped.
Ann-Louise Hittle, a vice president of oil industry expert Wood Mackenzie, said the production cut would "squeeze" the oil market in the third quarter next year and help Brent prices rise above $ 70 per barrel.
& # 39; Personal interest ultimately & # 39;
"For many countries, personal interest prevails," he said. "Saudi Arabia's long-term goal in managing the oil market is to avoid sharp declines and sudden increases in supply and industry, which are damaging to demand, so that Saudi Arabia can support local water resources in Saudi Arabia." it needs higher oil revenues.
Russian Energy Minister Alexander Novak described the negotiations with OPEC countries as "quite challenging", but said the decision "should help the market reach a balanced state".
Iyla I think this is a strong sign for everyone who doubts that our cooperation is going on and we can react to any challenge that the market throws at us ğ through a Russian translator.
OPEC's dependence on non-members such as Russia emphasizes the weak impact of the cartel on the oil markets that have dominated it for years.
Increased US oil production
The OPEC-Russia alliance was made necessary in 2016 to compete with the increasing oil production of the US in recent years. According to some estimates, the US has become the world's largest raw producer this year.
It is unlikely that the US President Donald Trump, who is printing the cartel to maintain production, will be warmly welcomed. He tweeted on Wednesday: "I hope the OPEC will keep the oil flow in a limited way, not as it is. The world does not want to see or need higher oil prices!"
An obstacle to the agreement was Iran, the regional rival of Saudi Arabia and member of OPEC. This crude oil exports were already debated because of the sanctions imposed by the United States for any interruption exemption.
El Mazrouei said he was given an exemption in addition to Iran and Libya.
”That means we're going to have a little bit more of our contribution,“ he said.
"Within the OPEC, we are committed to delivering and delivering 800 (bin bpd) between us."