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OPEC Agrees to Cut Production

It appears OPEC has finally agreed to cut production in a drive to end global surplus

Bloomberg News has reported that OPEC clinched a deal to curtail the global oil supply today, surprising many, in a bid to clear a record global crude glut thus going a long way to prove the group’s credibility; this will be its first cut in 8 years, .

OPEC will reduce production by 1.2m barrels a day to 32.5m a day, a delegate said this afternoon in Vienna, however he has asked not to be identified as the decision isn’t yet public. USA Crude Oil has jumped about 7.6% today, currently trading around $49 a barrel.

After weeks of often tense negotiations, OPEC’s three biggest producers Saudi Arabia, Iraq and Iran resolved their differences over sharing the burden of cuts to rein in supply for the first time since 2008.

Significantly, it appears the Saudis accepted that Iran was a special case and is expected to be able to freeze their production at about 3.9m barrels a day. The agreement is also likely to include a reduction of about 600,000 barrels a day by non-OPEC countries.

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