OPEC and non-OPEC countries have decided to extend crude oil production cuts by 9 months, until March 2018, in an attempt to reduce the global glut of crude oil and steady oil prices that have halved since mid-2014.
In December 2016, OPEC countries and 11 non-OPEC producing countries agreed to cut their production by a total 1.8 mb/d in the first half of 2017 (compared to October 2016 production levels). Under the new agreement, the 1.8 mb/d cut will be maintained for a further 9 months; the split between countries will be slightly different after Equatorial Guinea agreed to join the OPEC and Nigeria and Libya will still be excluded from cuts.
The production cuts will bring stock levels back to their five-year average (from a record high of 3 Gbl to their 2.7 Gbl average) and should avoid oil prices to fall below US$40/bbl, as US unconventional production has been soaring and has reached its highest level since August 2015.