Opec agrees 1.2m bpd oil output cut

The logo of the Organization of the Petroleum Exporting Countries is seen inside its headquarters in Vienna Austria

Opec agrees 1.2m bpd oil output cut

"U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market", said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.

However, OPEC and its non-cartel members - who combined account for around half of global output - agree on one thing: a glut on the market has led to oil prices falling by more than 30 percent in the space of two months.

FILE - Candles, lit by activists, protesting the killing of Saudi journalist Jamal Khashoggi, are placed outside Saudi Arabia's consulate, in Istanbul, during a candlelight vigil, October 25, 2018.

Iran, Libya and Venezuela were effectively given exemptions.

Saudi Arabia first denied the Hook-Falih discussion took place but later confirmed it.

Economic Affairs Minister Datuk Seri Azmin Ali said Malaysia's reduced output was in line with its commitment to worldwide cooperation to face economic challenges posed by the global oil market.

India had also asked for action to bring down high oil prices, he said.

Russian Federation was reluctant to reduce output at the meeting.

Opec agrees 1.2m bpd oil output cut

The Minister of Petroleum, Industry and Mineral Resources of the Kingdom of Saudi Arabia, Khalid Al-Falih and his Nigerian counterpart, Ibe Kachikwu had last week in Abuja discussed the need to bring about a stabilisation in the crude oil price and in the global crude oil market.

The government on Friday expressed confidence that whatever decision the Organisation of Petroleum Exporting Countries (OPEC) takes on output cuts to check the fall in crude prices, it would not go against the interests of consuming nations. On Wednesday, just before OPEC officials started talking about how to stabilize the oil market, Trump lobbed a rhetorical grenade in their direction: "Hopefully OPEC will be keeping oil flows as is, not restricted". "I think the Saudis tried to walk a tightrope: they want to make sure they maintain their relationship with the USA, but they also need to make some cuts because they need a higher oil price to balance their budget".

But recognizing economic reality is one thing; political reality, in the form of Trump tweets, keeps gatecrashing. "Oil prices should be much lower based on supply!" However, it still wields enormous influence, analysts say.

US crude was on track to end the week up 3.7 percent and Brent was 5.4 percent higher on the week so far. Russian Federation had initially balked at cutting production alongside OPEC.

Oil prices have rallied as the world's major producers agreed a deeper-than-expected cut in output on Friday, recovering the losses of the previous day, when oil-rich states failed to reach a deal.

OPEC ministers came to Vienna recognizing the economic realities.

One stumbling block to an agreement had been Iran, Saudi Arabia's regional rival and fellow OPEC member, which had been arguing for an exemption to any cuts because its crude exports are already being pinched already by USA sanctions.

This week, USA senators are due to take aim at the Saudi-led coalition fighting in Yemen and will hold an unprecedented vote on ending US support for the war.

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