A GROUP of 11 non-OPEC countries has agreed to cut oil output by a total of 558,000 bbl/d as efforts to stabilise the oil markets continue.
According to Bloomberg, immediately after the meeting on 10 December, the price of oil jumped to almost US$58/bbl, its highest level since July 2015, closing at US$56.79/bbl, a rise of 4.5% on the day’s opening price. The price has been rising fairly steadily since 30 November, when OPEC countries agreed to cut oil production by 1.2m bbl/d from January 2017.
At the meeting in Vienna, Austria, ministers from Azerbaijan, Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan met with ministers from OPEC countries. The 11 countries will now also cut their oil production from January 2017 for a minimum of six months, though this can be extended for up to a year. OPEC says that the countries recognise the value of such a move for oil producers and consumers.
The OPEC and non-OPEC ministers also agreed to strengthen cooperation in working towards a sustainable oil market, including through joint analyses and outlooks, and will regularly review the status of that cooperation. Two non-OPEC countries will join the OPEC Ministerial Monitoring Committee of oil ministers.
Industry analyst Neil Beveridge of Sanford C Bernstein told Bloomberg that the level of cooperation was “unprecedented”, and that if the agreements are complied with, it will be enough to create a market deficit of oil. This is likely to push prices up further.