OPEC agreed to decrease oil production

OPEC agreed to decrease oil production by 1.2 million barrels per day, which is first contraction of yields since 2008. The agreement of the organization immediately lead to increase in oil price by 8%. The representatives of OPEC voted yesterday in Vienna text of the agreement in September, which should help to prevent overproduction and will stabilize the prices of commodity.

OPEC agreed to cot oil production by 1.2 million barrels per day, producing totally 32.5 million barrels per day, said the Qatari Energy Minister Mohammed Saleh Al Sada and his counterpart from UAE Suhail Mohamed Faraj Al Mazrouei after six-hour meeting in Vienna.

“The market needs to be rebalanced. This means to take decisions by OPEC featuring some key players outside the organization, which gave support and promise to participate in this type of agreement later”, said the Energy Minister Mohammed Saleh Al Sada. “This is an important step forward, and the agreement is a historic moment that will allow the rebalancing of the market. I take this opportunity to thank my colleagues who do not miss forces to make this event a success”, added he.

OPEC has created a committee to monitor the agreement. It includes Qatar, Venezuela and Algeria.

Saudi Arabia, which is the largest oil exporter in the world, has agreed to reduce its production to 10.06 million barrels from 10.54 million barrels per day, according to the new agreement. Iran, which opposed the agreement, agreed to reduce production yields to 3.797 million barrels per day from 3.85 million barrels per day.

Moreover, key players outside OPEC declared that will participate in attempts ot limit oil production and will add another 0.6 million barrels per day. Russian Federation assured that will participate in efforts to reduce production and will shrink yields by 0.3 million barrels a day, which is half less than demanded by the cartel.

The organization also announced that OPEC has approved the temporary freezing of Indonesia’s membership in the group. The country restored its membership last December, after emerged from the cartel in 2008, Indonesia has become a net importer and came to the conclusion that it can participate in the reduction. The share of Indonesia will be distributed among the other Member States, but the country could return, as a member of OPEC later.

Prospects for reducing overproduction encouraged strong price of the leading varieties of oil. The price of reference Brent for Europe jumped more than 8.5% to above 50 USD per barrel.

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