OPEC member country officials in Algiers said they had reached an agreement to limit production to between 32.5 million and 33 million barrels per day, cutting daily output by about 750,000 barrels, for the first time since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.
“We have decided to decrease production by around 700,000 bpd,” said Iran’s oil minister, Bijan Zanganeh.
Following the strategic agreement reached in Algiers, oil stocks moved higher in New York, bringing the rest of the market up with them. Oil prices jumped more than 5% to trade above $48 per barrel after the outcome of OPEC’s informal meeting in Algeria took traders by surprise.
Oil price is rallying in the opening day of the meeting of OPEC in Algeria; Brent and WTI mark both fell around 1.50 percent, after morning’s declaration, made by Iran’s oil minister, Bijan Namdar Zanganeh, who seems to have erased the little chance of a deal today for a freeze or cut production of crude oil.
Oil prices fell on Tuesday after rising yesterday supported by the crisis in Libya and the opening of Venezuela to the freezing of oil production. On Asian markets, Light Sweet Crude recorded a 0.85% rise to $ 43.67 a barrel, while Brent Crude lima 0.19% to $ 46.33 a barrel.
In Libya, the military clashes between Ras Lanuf and Sidra oil terminals, have caused the blocking of exports from Libyan ports. They are taken up, in fact, fighting between forces loyal to the government of Libyan national unity, backed by the United Nations, and the administration’s rival for control of oil ports in the east African country.
The oil market will remain in a situation of oversupply until at least mid 2017. The International Energy Agency stresses in its monthly bulletin that it has thus reversed its previous forecasts. “Supply will continue to outpace demand at least through the first half of next year. As for the market’s return to balance – it looks like we may have to wait a while longer,” the IEA said in its report.
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