OPEC extends output cut deal to March next year

He added that OPEC members Nigeria and Libya would still be excluded from cuts as their output remained curbed by unrest.

That time, OPEC agreed to slash the output by 1.2 million barrels per day from January 1, while non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1 for six months, extendable for another six months.

OPEC comprises 13 nations which collectively account for 40 per cent of global oil production, 73 per cent of the world's oil reserves and set the tone for happenings in the oil industry.

Equatorial Guinea which first expressed interest in joining OPEC in 2009, was among 10 non-cartel members who last December pledged to reduce oil production by almost 600,000 barrels per day. But the hoped-for benefits could be short-lived. Their output already is partially offsetting the cuts, and even more USA companies are poised to return if prices rise further. The two sides chose to remove about 1.8 million barrels per day from the market in the first half of 2017 - equal to two percent of global production.

Non-OPEC countries led by Russian Federation chipped in with another 600,000-barrel reduction.

The decision took place yesterday after the 2nd ministerial meeting of the two groups at headquarters of OPEC in Vienna, Austria.

US oil production has already risen by more than 10 percent since mid-2016 to more than 9.3 million bpd as drillers take advantage of higher prices and the supply gap left by OPEC and its allies. "But all indications discovered that a nine-month extension is the optimum", he said. OPEC hadn't yet announced the production levels for the agreement on Thursday.

The Opec has a self-imposed goal of bringing stocks down from a record high of three billion barrels to their five-year average of 2.7 billion.

'We considered various scenarios, from six to nine to 12 months, and we even considered options for a higher cut.

The upshot is that the price of oil - and derived products like fuel -is unlikely to increase much in coming months, analysts say.

"We have seen a substantial drawdown in inventories that will be accelerated", al-Falih said.

Meanwhile, WTI crude oil futures declined 4.4% to $49.1 per barrel and Brent crude decreased 4.1% to $51.8 per barrel.

OPEC accounts for a third of global oil production and includes numerous world's largest oil exporters such as Saudi Arabia and Qatar.

  • Zachary Reyes