The Organisation of Petroleum Exporting Companies (OPEC) has finally reached a deal to cut oil supply – its first such deal in eight years.
The deal was reached in order to boost the price of oil, which has been depressed for over 2 years and which has seen a drop-in value of more than 50% since mid-2014.
OPEC’s president, Mohammed Bin Saleh Al-Sada said that a supply cut of 1.2 million barrels of oil per day would begin in January. Immediately following the news of the deal on Wednesday 30th November, the price of Brent crude oil climbed by 10% to $51.94 per barrel. Furthermore, the price of US crude oil jumped 9% to $49.53 per barrel.
According to Al-Sada, as well as an OPEC members’ production cut, non-members of the oil cartel will be expected to cut production by around 600,000 barrels of oil per day.
Al-Sada didn’t say which countries these might be, but he did confirm that Russia was willing to cut 300,000 barrels of output from its 10 million barrels per day.
Speaking to the BBC, he said:
“This agreement comes from a sense of responsibility from OPEC member countries and non-OPEC member countries for the general well-being and health of the world economy.”
This deal, which was first agreed in principle back in September, will be good news for those invested in the oil market, as well as big oil companies like Fuchs, which produces Fuchs Reniso C85E and a range of other products.