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Oil prices rally after OPEC’s oil cut consensus

by ChemOrbis Editorial Team -
  • 29/09/2016 (13:54)
According to media sources, the Organization of Oil Producing Countries (OPEC) reached a preliminary consensus to cut oil production for the first time in eight years at the Algeria meeting. Accordingly, the cartels’ oil output will be reduced to a range of 32.5-33.0 million barrels of oil per day (bpd) compared with the group’s current estimated oil production of 33.24 million bpd. The full details for the agreement is set to be revealed during OPEC’s formal meeting in November.

The group’s long-awaited consensus as part of the efforts to stabilize oil markets showed that Saudi Arabia conceded to ease production, although Iran was allowed to increase its output. Iran is refraining from any decrease or freeze in its oil production as the country aims to reach pre-sanction levels of more than 4 million bpd. Iran has been producing around 3.6 million bpd in the last few years.

Some oil traders are skeptical about the preliminary deal as they want to see the full terms and the details regarding how the oil output cut will be distributed across the group.

Following OPEC’s decision, NYMEX crude oil futures settled $2.38 higher at $47.05/barrel on Wednesday while ICEA Brent oil futures closed at $48.69/barrel, up $2.72 from the previous settlement.
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