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| Non-Opec countries agree to cut oil output to ease glut Non-Opec countries agree to cut oil output to ease glut | |
| (about 17 hours later) | |
| Oil-producing nations that do not belong to the Opec cartel have agreed to cut output by 562,000 barrels a day, Opec sources have said. | Oil-producing nations that do not belong to the Opec cartel have agreed to cut output by 562,000 barrels a day, Opec sources have said. |
| The agreement would be the first between the two groups since 2001 to jointly limit oil output. It aims to ease a global glut after more than two years of low prices that have overstretched many governments’ budgets and spurred unrest in some countries. | The agreement would be the first between the two groups since 2001 to jointly limit oil output. It aims to ease a global glut after more than two years of low prices that have overstretched many governments’ budgets and spurred unrest in some countries. |
| Last week Opec agreed to slash output by 1.2m barrels a day to 32.5m from 1 January, with top exporter Saudi Arabia cutting as much as 486,000 barrels a day. | Last week Opec agreed to slash output by 1.2m barrels a day to 32.5m from 1 January, with top exporter Saudi Arabia cutting as much as 486,000 barrels a day. |
| Before talks in Vienna on Saturday, the Opec secretary-general, Mohammed Barkindo, said a deal would boost the global economy by sending prices higher and therefore helping some rich countries tackle low inflation. | Before talks in Vienna on Saturday, the Opec secretary-general, Mohammed Barkindo, said a deal would boost the global economy by sending prices higher and therefore helping some rich countries tackle low inflation. |
| Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as US shale firms out of the market. | Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as US shale firms out of the market. |
| The plunge in oil to below $50 per barrel – and sometimes even below $30 – from as high as $115 in mid-2014 has helped reduce growth in US shale. However, it also hit the revenues of oil-dependent economies including Saudi Arabia and Russia, prompting the two biggest crude exporters to start their first oil cooperation talks in 15 years. | The plunge in oil to below $50 per barrel – and sometimes even below $30 – from as high as $115 in mid-2014 has helped reduce growth in US shale. However, it also hit the revenues of oil-dependent economies including Saudi Arabia and Russia, prompting the two biggest crude exporters to start their first oil cooperation talks in 15 years. |
| Apart from Russia, the talks on Saturday were attended by or had comments or commitments sent from non-Opec members Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan. | Apart from Russia, the talks on Saturday were attended by or had comments or commitments sent from non-Opec members Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan. |
| Many non-Opec countries such as Mexico and Azerbaijan face a natural drop in oil production, and some analysts expressed doubts that those declines should be counted as cuts. | Many non-Opec countries such as Mexico and Azerbaijan face a natural drop in oil production, and some analysts expressed doubts that those declines should be counted as cuts. |
| Focus will now turn to compliance with the agreement, particularly as Opec has a long history of cheating on output quotas. | Focus will now turn to compliance with the agreement, particularly as Opec has a long history of cheating on output quotas. |
| Gary Ross, an oil industry commentator and founder of the consultancy Pira Energy, said: “They are all enjoying higher prices and compliance tends to be good in the early stages. But then as prices continue to rise, compliance will erode.” | Gary Ross, an oil industry commentator and founder of the consultancy Pira Energy, said: “They are all enjoying higher prices and compliance tends to be good in the early stages. But then as prices continue to rise, compliance will erode.” |
| He said he expected Russia to curtail output in line with its pledge of 300,000 barrels a day. Opec would target an oil price of $60 a barrel as anything higher could encourage rival production, Ross added. | He said he expected Russia to curtail output in line with its pledge of 300,000 barrels a day. Opec would target an oil price of $60 a barrel as anything higher could encourage rival production, Ross added. |