Published: Sun, December 09, 2018
Markets | By Otis Pena

OPEC, Russia agree to slash oil output

OPEC, Russia agree to slash oil output

In November, Saudi Arabia had its highest oil production of all time: 11.1 million barrels per day.

Because these countries control such a large share of the total oil market, OPEC has an incredible amount of power when it comes to regulating prices.

A bipartisan group of US senators has vowed to sanction Saudi Arabia after a briefing by CIA Director Gina Haspel convinced them the Saudi crown prince ordered the killing, which took place October 2 in the Saudi Consulate in Istanbul.

Russian Energy Minister Alexander Novak praised the ability of his Saudi counterpart Khalid al-Falih "to find a solution in the most hard situation", indicating Russia was on board.

Opec's surprise output reduction has wrong-footed short-sellers.

In a way, all the oil producing nations that managed to bounce back into profitability and overcome the severe hardships of the drastic 2015 price fall owe their success to the Vienna agreements.

"U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market", said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.

Novak said that Russian Federation, which leads the nonmember-countries in the so-called OPEC+ alliance, would introduce cuts "gradually" to allow for "climatic and technical conditions" but aimed to reach the cuts target "in the next few months".

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OPEC Kingpin Saudi Arabia, meanwhile, had to bear in mind pressure from the United States after President Donald Trump demanded in a tweet on Wednesday that the cartel boost output so as to lower prices and help the economy.

On Wednesday, the US leader tweeted he hoped OPEC would "be keeping oil flows as is, not restricted".

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FILE - A worker hangs from an oil derrick outside Williston, N.D., where oil is taken from the Bakken shale formation. However, it still wields enormous influence, analysts say. In turn, the USA has become the world's top fuel supplier.

Iran's Petroleum Minister Bijan Zangeneh (1st R) speaks to journalists as he attends the 175th OPEC meeting of the OPEC conference in Vienna, Austria, on December 06, 2018.

Following crunch talks in Vienna, members of Opec will reduce output by 800,000 barrels per day while Russian Federation and other nations signed up to a 400,000 reduction. OPEC was surprised and angered by Trump's about face on sanctions, but so too were US pipeline and oil producers.

This week, US senators are due to take aim at the Saudi-led coalition fighting in Yemen and will hold an unprecedented vote on ending USA support for the war.

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