OPEC agrees oil output cut, no final figure yet - delegate

OPEC agrees oil output cut, no final figure yet - delegate

We will note, the President of the United States Donald trump on Wednesday, December 5, urged OPEC and allies not to cut oil production in 2019.

"We'll cut 1.2 million bpd total", Iraq's Oil Minister Thamer Abbas al-Ghadhban told reporters after the meeting.

Officials said Opec would reduce output by 800,000 barrels per day, based on October's production levels.

According to the agreement, OPEC member states contribute 0.8 million bpd output cut and non-OPEC oil pumpers including Russian Federation contribute 0.4 million bpd output cut from the production of October level.

Ahead of the meeting Brent, the global standard, was down 59 cents at $59.47 a barrel while benchmark NY crude was 61 cents lower at $50.88.

US production is expected to average more than 12 million bpd in 2019, an increase of more than 3 million bpd in 2016.

For Russia, which leads the non-member countries in the so-called OPEC+ alliance, "it's much more hard to cut than for other countries, because of our climatic conditions", Russian Energy Minister Alexander Novak said on Thursday.

"They should know that OPEC is not part of their Secretary of Energy", said Zanganeh.

However, these days OPEC was facing considerable pressure to keep oil prices down.

Oil output from the world's biggest producers - Opec, Russia and the United States - has increased by 3.3 million bpd since the end of 2017 to 56.38 million bpd, meeting nearly 60 percent of global consumption.

The talks had earlier hit an impasse because Saudi Arabia refused to agree to an exemption for Iran, OPEC sources told Reuters.

They argue Riyadh's determination to force through a larger-than-expected cut was partly a warning shot in line with thinly veiled threats by Saudi officials to jolt the global economy, if the US moves to impose sanctions on the kingdom for Khashoggi's brazen killing.

On the demand side, the trade dispute between USA and China threatens global economic growth and could lead to lower demand in 2019. The three countries are the world's largest producers of oil.

Venezuela, Iran, and Libya were exempted from the production cutback, owing to Venezuela's already declining production, Iran's uncertain economic future under USA sanctions, and Libya's tumultuous security situation.

After stressing that his country opposes reducing its oil production due to U.S. sanctions, Iranian Oil Minister Bijan Namdar Zanganeh complained that it was the first time a U.S. president was trying to tell OPEC what to do.

The going was tough at this week's OPEC meetings as several countries - including Iran - demanded exemptions from the cuts.

OPEC's de facto leader Saudi Arabia, under economic pressure after a collapse in oil prices last month, has sought to walk a fine line between preventing a surplus next year and appeasing Trump.

The Vienna meetings focused on how much production OPEC and Russian Federation would cut, and how the reductions would be shared among the wider group. Oil prices surged over 4 percent following the news.

After Tuesday's "mammoth drop from the API, this morning's EIA report has yielded a much more modest draw", said Matt Smith, director of commodity research at ClipperData. The reduction was larger than the 1 million bpd cut that analysts had expected.

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