The Organisation of the Petroleum Exporting Countries (OPEC) has reached an agreement to cut crude oil production by 0.6 mb/d, from the current 33.6 mb/d (1/3 of global oil production) to 32.5 mbl/d, as announced in September 2016. This is the first agreement to limit production since 2008, in an attempt to raise global prices, which have more than halved from over US$100/bbl in June 2014 due mainly to a soaring US shale oil production.
The November 2016 agreement includes production levels for each member country: Saudi Arabia will limit its crude production by nearly 486 kb/d to 10.058 mb/d, while Iraq, the second largest producer among OPEC, will cut its production by 209 kb/d. The United Arab Emirates, Kuwait and Qatar will cut their production by a total 0.3 mb/d (139 kb/d cut for the UAE and 131 kb/d for Kuwait). Iran will be allowed to raise its production to about 3.8 mb/d, a success for the country which wanted to return to its pre-sanction production levels (around 4 mbl/d) before considering any cut in output. Indonesia, which re-joined OPEC in early 2016, has rejected the proposed 5% cut (around 37 kb/d): the net oil importer will suspend its membership. In Africa, Angola and Algeria, the first and third oil producers in the continent, will reduce their production by 78 kb/d and 50 kb/d respectively; Gabon will only cut its production by 9 kb/d, while Libya and Nigeria will be exempted from quota due to the civil war in Libya and difficulties in the Niger delta for Nigeria.
Some non-OPEC producers have agreed to reduce their production by a further 0.6 mb/d. Russia, which pushed production to new records in recent months, agreed to cut its output by 0.3 mb/d. Azerbaijan and Kazakhstan might also reduce their productions. OPEC and non-OPEC producers will meet on 9 December 2016.
The announcement has already resulted in a nearly 9% increase in Brent prices.