OPEC and non-OPEC oil producers have reached an agreement to jointly reduce crude oil production by 1.2 mb/d, effective as of January 2019 for an initial period of six months, in an attempt to ease the global glut and strengthen low prices. This amount will be shared among OPEC countries (0.8 mb/d) and non-OPEC countries such as Russia (0.4 mb/d). However, Iran is exempt from the output cut deal and was granted an exemption from curbing its production due to the ongoing US sanctions, which have already significantly reduced its oil shipments. The next OPEC and non-OPEC ministerial meeting is slated to take place in April 2019.
This is not the first agreement of this kind between OPEC and non-OPEC oil producers: in November 2016, Russia and the OPEC jointly decided to cut their output by 1.8 mb/d in order to prop up global prices and production levels were set for each member country: Saudi Arabia agreed to limit its crude production by nearly 486 kb/d to 10.058 mb/d, while Iraq, the second largest producer among OPEC, agreed to cut its production by 209 kb/d. 24 countries representing around 60% of the global oil production committed themselves to achieving this target and the production cuts were extended again in December 2017. However, this production cut was by far exceeded (by 152% as of May 2018) and in June 2018, the OPEC and Russia decided to stick to the initial target, corresponding to an effective increase of global crude oil production of up to 1 mb/d.
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