OPEC will reduce output to 32.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Vienna Wednesday. The breakthrough deal showed an apparent acceptance by Saudi Arabia that Iran, as a special case, can still raise production.
Khalid Al-Falih at OPEC meeting, Nov. 30.Photographer: Akos Stiller/BloombergThe Organization of Petroleum Exporting Countries is ditching a pump-at-will policy introduced in 2014 to resume its traditional role as price fixer. The shift -- aimed at draining a crude glut that’s pushed down prices for two years -- will help revive the tattered finances of oil-producing countries and reverberate in markets around the world, from the Canadian dollar to Nigerian bonds to U.S. shale equities.
“This should be a wake-up call for skeptics who have argued the death of OPEC,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. “The group wants to push inventories down.”Start your day with what’s moving markets.
After weeks of often tense negotiations, the eventual alignment of OPEC’s biggest producers points to the increasing dominance of Iran among the group’s top ranks. The Saudis accepted that Iran can raise output to about 3.8 million barrels a day, according to one delegate, marking a victory for the Persian Gulf country that has long sought special treatment from OPEC as it recovers from sanctions. Saudi Arabia previously proposed that its regional rival limit output to 3.707 million barrels a day, delegates said.Read more: Riyadh finds its power waning against a resurgent Iran and Iraq
The agreement, which also calls for a reduction of about 600,000 barrels a day by non-OPEC countries, pushed up Brent crude by as much as $4.08 to $50.46 a barrel. Prices remain at half their level of mid-2014.
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