Although OPEC had struggled to reach an agreement because Saudi Arabia reportedly had refused to agree to an exemption for Iran, the deal was reached with Russian Federation agreeing to cut output by 200,000 barrels per day while Moscow agreed on a specific reduction. OPEC and its partners, which together account for around half of global output, say a glut in the market has led to oil prices falling by more than 30 percent in two months.
Al-Falih said before the start of the conference that a 1 million barrels per day (mbpd) oil cut would be sufficient for OPEC+.
Zangeneh on Thursday said Iran should be exempted from any oil production cut deal as long as it remains under "illegal" United States sanctions. However, later the price of oil went back down.
By agreeing on a level of cuts which was even deeper than expected, once again OPEC succeeded to surprise the market, a decision that definitely is not going to please the third musketeer which is probably already preparing his next tweet cascade. In New York last night Brent was... The reduction volume came out in face of U.S. President Donald Trump's repeated calls for lower oil prices. Another source said Tehran wanted an OPEC communique to specify that Iran was exempt from cuts.
In an October blog post, we cautioned that oil had run ahead of fundamentals and that a release of waivers for Iran oil consumers could cause prices to retrace back to the mid-$70s - effectively erasing some of the geopolitical risk premium that had entered the market.
Opec is no more the sole arbiter of global crude dynamics.
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On Friday, four OPEC and non-OPEC sources said Saudi Arabia's arch-rival Iran, which came under fresh USA sanctions in November, was also holding up a final deal. "We continue to re-tool our export infrastructure along the Gulf Coast to expand capacity, and you continue to see strong demand globally for crude oil".
The price of crude jumped almost 4.5 percent Friday morning, to $53.75 per barrel, on word of the agreement, which called for a bigger reduction than analysts had expected.
"Having the next meeting in April will be important for planning purposes to speed the cycle up a bit", she said.
Opec members will reportedly reduce their production by 800,000 barrels per day (Bpd), with non-Opec producers to deliver the remaining 400,000 Bpd cut, all based on October levels.
Before Thursday's meeting, Al-Falih said that "if everybody is not willing to join and contribute equally, we will wait until they are" and he was prepared for the consequences of no deal.
USA waivers allowing eight countries to continue purchases of Iranian oil expire at the start of May. This was higher than the widely expected 1 million bpd reduction the market expected.
Crude inventories fell 7.3 million barrels last week, the first drawdown since September, as net crude imports hit a record low of 4 million bpd, the US Energy Information Administration said on Thursday. "If they don't get rid of that oversupply, the market will drown in oil", said Antoine Halff of the Center on Global Energy Policy at Columbia University.