Oil prices surge as Opec reaches deal to cut output

The oil cartel agreed to curb output for the first time in eight years. And this time, even non-Opec producers like Russia are pitching in.
Opec secretary General Nigerian Mohammed Barkindo (right), the Chairman of the Opec Board of Governors Algerian Mohamed Hamel (left) and the President of the Organisation of Petroleum Exporting Countries (Opec) Mohammed bin Saleh al-Sada (centre) att
Opec secretary General Nigerian Mohammed Barkindo (right), the Chairman of the Opec Board of Governors Algerian Mohamed Hamel (left) and the President of the Organisation of Petroleum Exporting Countries (Opec) Mohammed bin Saleh al-Sada (centre) attend a meeting of the Organization of the Petroleum Exporting Countries, Opec, at the Opec headquarters in Vienna, Austria, on Nov 30, 2016. PHOTO: AFP

VIENNA • The Opec oil cartel reached a deal late yesterday to reduce its output for the first time in eight years, Qatar's energy minister and president of the Opec conference said. The cut triggered a surge in oil prices.

The reduction by the Organisation of Petroleum Exporting Countries will be "1.2 million barrels per day, to bring its ceiling to 32.5 million barrels per day", Mr Mohammed Saleh Al-Sada told a news conference in Vienna.

He said non-member Russia had committed to reducing its output by 300,000 barrels per day, half of a hoped for 600,000 barrels per day from outside the cartel.

Oil prices rose more than 8 per cent. The cuts include Iraq reducing output by 200,000 barrels per day to 4.351 million barrels per day from January. Kuwait, Venezuela and Algeria agreed to monitor compliance. Opec will meet non-Opec producers next Friday.

US West Texas Intermediate crude futures rose US$4.02 to US$49.25 a barrel, a 8.9 per cent gain by press time. Brent crude futures rose US$3.79 to US$50.17 a barrel, a 8.2 per cent gain.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on December 01, 2016, with the headline 'Oil prices surge as Opec reaches deal to cut output'. Print Edition | Subscribe