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OPEC+ Oil Producers Agree on Extra 500,000 bpd Cuts

OPEC+ Oil Producers Agree on Extra 500,000 bpd Cuts

Saturday, 7 December, 2019 - 09:15
Saudi Minister of Energy Prince Abdulaziz bin Salman and Russia's Energy Minister Alexander Novak are seen at the beginning of an OPEC and NON-OPEC meeting in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger

Saudi Arabia and Russia spearheaded a deal on Friday that will see the OPEC+ group of oil producers commit to some of the sector's deepest output cuts in a decade aiming to avert oversupply and support prices.

The figures include an extra 500,000 barrels per day in cuts to take the OPEC+ target 1.7 million bpd, or 1.7 percent of global demand.

Saudi with OPEC peers and allies led by Russia backed a plan that could see cuts of as much as 2.1 million barrels per day (bpd), Saudi Energy Minister Prince Abdulaziz bin Salman said.

OPEC+, which includes more than 20 producers, pump over 40 percent of the world's oil.

Of the 500,000 bpd additional cuts, OPEC will shoulder 372,000 bpd and non-OPEC producers an extra 131,000 bpd, OPEC announced.

"It's the best outcome you could have expected. It puts a floor under prices at $60 Brent but (we're) still likely in a $60-65 Brent market until the global economy improves and thenwe could see $65 to $70 Brent in Q2," said Gary Ross, founder of Black Gold Investors.

OPEC+ will deepen cuts for the first three months of 2020, shorter than the six- or 12-month scenarios some OPEC members wanted.

Eleven of OPEC's 14 member states are participating while Iran, Libya and Venezuela are exempt.

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