Non-Opec oil producers have agreed with Opec to cut production by about 600,000 barrels a-day in January. The agreement was finalised at a meeting in Vienna on Saturday 10 December.
The agreement, which is the first between Opec and non-Opec nations in 15 years, follows the deal announced on 30 November by Opec members to cut production by 1.2 b/d from 1 January 2017.
The agreement between Opec and several non-Opec oil exporting countries was widely expected and Russia had already agreed to cut production by 300,000 b/d. The new Opec ceiling will 32.5m b/d from January, and will be in place for six months.
The majority of Opec countries agreed to cut production by about 4.5 per cent. In terms of barrels a-day, Saudi Arabia will make the largest cuts with a 486,000 b/d reduction in output.
The cuts to global production are expected to stablise the oil price and possibly lead to some price strengthening as the global glut of oil is depleted.
Limited economic impact from Opec cuts
Opec shutterstock 432242581
On 30 November Opec agreed to cut production by 1.2 million barrels a-day in January 2017. At the same time, non-Opec producers led by Russia are close to finalising a commitment with Opec to cut production by 600,000 b/d.
The initial reaction to the deal was a surge in oil prices which went above $50 a-barrel for the first time since October as markets anticipate that surplus oil supplies that have dampened the market since late 2014 start to recede Read more