OPEC reportedly agrees 1.2m barrel a day output cut
The world's major oil producers agreed to slash their output by a tad more than had been expected following two days of talks in Vienna.
According to reports, the Organisation of Petroleum Exporting Countries, plus Russia and Kazakhstan, which together are known as OPEC+, will cut their combined output by 1.2m barrels of oil a day, using member countries' production levels in October as the baseline for the contributions which they must make to the reduction.
Going into the meetings, analysts had anticipated a reduction of between 1.0m-1.3m b/d or less, should Russia decide not to participate.
In the end, Moscow did while Tehran was granted an exemption, as its output remained under the effect of the curbs imposed as a result of US sanctions.
To take note of, Russia reportedly acted as a facilitator between Saudi and Iran, given the extremely fraught relations between the two Middle-Eastern nations.
OPEC would reportedly contribute 800,000 b/d to the cut, with Russia set to reduce output by 200,000 b/d and other non-OPEC countries the remainder, Reuters reported citing a source at the Russian Energy Ministry.
The cartel later said in a communique that ministers were scheduled to meet again in April in order to review the situation in markets.
In an initial reaction, as of 1435 GMT front month Brent crude oil futures on the ICE were jumping by 4.09% to $62.83 a barrel, having hit an intra-day high at $63.32 a barrel.
Commenting on the implications of Friday's decision for oil markets, Neil Wilson, chief market analyst at Markets.com, said: "The cut is a real positive after some fairly tough negotiations. The fact that the OPEC-Russia alliance is still holding matters as much as the details of the deal itself.
"It's probably a little better than the market had been expecting, but not by a lot. I'd still say that a deeper cut would be needed to really see oil rally back to $70. Indeed the rally has failed to top the daily peaks seen on Dec 4th and 5th, which is indicative of the fact the market is not fully bought into this deal as being enough to tilt the market fundamentally back into balance quickly. We need to see those highs scaled before we would be able to say this is the start of a sustained rally back to $70.
"The deal does though suggest we have something of a floor under Brent at $58, which is now forming very stiff support."