Brent Oil Recovers Following OPEC Oil Output Cut Announcement

Published December 11th, 2018 - 01:36 GMT
Price of Brent crude trades above $62 a barrel at start of week (Shutterstock)
Price of Brent crude trades above $62 a barrel at start of week (Shutterstock)

The price of Brent crude oil was up at the start the week on Monday, after the Organization of Petroleum Exporting Countries (OPEC) and its oil-producing allies agreed Friday to trim output by 1.2 million barrels per day (bpd).

The international benchmark Brent crude was trading at $62.06 per barrel with a 0.6 percent gain at 0610 GMT, after closing Friday at $61.67 a barrel, while the American benchmark West Texas Intermediate was up 0.3 percent at $52.55 a barrel.

Brent climbed to as high as $63.73 per barrel on Friday after OPEC said it would begin curbing its production by 800,000 bpd for six months beginning January 2019.

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The cartel's allies, who include Russia and nine other non-OPEC oil producing nations, will also contribute to the deal by trimming their output by 400,000 bpd over the same period.

OPEC heavyweight Saudi Arabia, the world's biggest crude oil exporter, will carry most of the burden by lowering its output by 500,000 bpd.

The cartel's second biggest producer, Iraq, will lower its output by 139,000 bpd, Oil Minister Samir Gazban said Sunday.

OPEC's third largest producer Iran, however, will be exempt from the deal due to U.S. sanctions on its crude exports, joining Libya and Venezuela, which will also be excluded from the oil cut agreement.

Russia, the world's second biggest crude producer, will curb its production by around 228,000 bpd, 2 percent of its 11.4 million bpd production level in October, Energy Minister Aleksandr Novak confirmed Friday.

The oil cut agreement is expected to lower the glut of supply in the global oil market and bring crude prices up, which have fallen by more than 30 percent since October.

The next OPEC and non-OPEC ministerial meeting will be held in Vienna, Austria, in April 2019 to review the impact of the deal on the global oil market.

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