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Oil producers join forces and cut production again

09 December 2018

According to the report, the OPEC-led group agreed to rollback output by 1.2 million bpd during the first six months of 2019.

Brent crude's price rose by as much as 5.2 per cent, to $63.17 a barrel.

Allies of the cartel led by Russian Federation agreed to cut an additional 400,000 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. Additionally, the markets could get a boost from a weaker U.S. Dollar, which could drive up foreign demand for U.S. crude.

OPEC's decision will, however, not affect Iran, Venezuela and Libya, which were granted exemptions due to their current peculiar economic circumstances.

Mohamed Azmin said this decision is a testament of Malaysia's commitment to worldwide cooperation to face economic challenges posed by the global oil market.

One stumbling block to an agreement had been Iran, Saudi Arabia's regional rival and fellow OPEC member, which had been arguing for an exemption to any cuts because its crude exports are already being pinched already by US sanctions.

Oil output from the world's biggest producers - OPEC, Russia and the United States - has increased by 3.3 million bpd since the end of 2017 to 56.38 million bpd, meeting nearly 60 per cent of global consumption.

The proposed cut was in line with the 1 million to 1.3 million barrels per day expected by analysts.

In order to put an end to crude oil prices, the organization of oil producing countries has agreed to cut the oil production. He added: "The World does not want to see, or need, higher oil prices!"

Opec delegates have been pushing for Moscow to cut around 250,000 bpd.

The Saudis at first denied that the meeting, an unprecedented development ahead of an OPEC summit, ever took place.

Washington added fuel to the fire when USA special representative for Iran Brian Hook met Falih in Vienna this week, in an unprecedented development ahead of an OPEC meeting.

But, eventually Russian Federation came to see the fact that it would be more beneficial for them to both back Saudis against the US and also keep its ally Iran happy with the results.

Oil producers have been under pressure to reduce production following a sharp fall in oil prices over the past couple of months. The remaining 12 countries will have to cut their production by 2.5 percent compared to October, or 800,000 barrels a day.

On the other hand, the US and China moving toward less tense relations, as well as the eight countries which are granted sanction waivers to continue buying Iranian oil all and all are factors which point to a more desirable position for Iran's oil industry in the future.

Oil producers join forces and cut production again