Media sources: OPEC nears agreement on production cuts

Ministers from OPEC and non-OPEC oil-producing countries met in Vienna on December 7, one day after an OPEC-only meeting of officials failed to result in an agreement to cut oil output.

Earlier reports indicated that Saudi Arabia was eyeing a cut of around 1 million barrels/day and that OPEC officials were waiting to meet with the other producers from outside the cartel, namely Russia, to deliberate on the issue.

The talks reportedly ran into trouble when the cartel’s de facto leader Saudi Arabia refused to grant Iran, whose oil industry is hampered by the US sanctions, an exemption from production cuts.

Further complicating the negotiations, Russia was reported to be reluctant to follow Saudi Arabia’s target of a sizable reduction. The biggest non-OPEC exporter, Russia, reportedly indicated that the potential cuts should be gradual.

However, the latest reports suggested that the cartel has finally agreed on a reduction of 1.2 million barrels/day, with OPEC members contribute 800,000 barrels/day of the cuts from 2019 and its allies adding 400,000 barrels/day later.

However, the latest media reports suggested that the cartel has finally agreed on a reduction of 800,000 barrels/day in 2019, with its allies contributing an additional cut of 400,000 barrels/day later.

The latest reports also stated that Iran, along with Libya and Venezuela, has been exempted from making any production cuts.

The accord, which will keep a total of 1.2 million barrels of production off the market, is expected to be reviewed in April.

After the news, Brent crude oil prices rose by around 2.5% to $62.10/bbl and the West Texas Intermediate (WTI) crude futures jumped by more than 4% at $53.66/bbl during intra-day sessions.