OPEC clinched a deal to curtail oil supply, confounding skeptics as the need to clear a record global crude glut --and prove the group's credibility -- brought its first cuts in eight years. Crude rose as much as 8.8 percent in London.
OPEC will reduce output to 32.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna following a ministerial meeting on Wednesday. The breakthrough deal, effective January, showed an acceptance by Saudi Arabia that Iran, as a special case, can still raise production.
The Organization of Petroleum Exporting Countries is ditching a pump-at-will policy introduced in 2014 to resume its traditional role as price fixer. The shift -- aimed at draining a crude glut that's pushed down prices for two years -- will helprevive the tattered finances of oil-producing countries and will reverberate in markets around the world, from the Canadian dollar to Nigerian bonds to U.S. shale equities.
"This should be a wake-up call for skeptics who have argued the death of OPEC," said Amrita Sen, chief oil analyst at Energy Aspects Ltd. "The group wants to push inventories down."
After weeks of often tense negotiations, the eventual alignment of OPEC's biggest producers points to the increasing dominance of Iran among the group's top ranks.It's allowed to raise output to about 3.8 million barrels a day, a victory for a country that's long sought special treatment as it recovers from sanctions. Saudi Arabia previously proposed that its regional rival limit output to 3.707 million barrels a day, delegates said.
Bloomberg