OPEC will limit oil production for the first time since 2008 – Expansion MX

ALGIERS (Reuters) –

The Organization of the Petroleum Exporting Countries (OPEC) reached on Wednesday an agreement to reduce the production for the first time since 2008, after Saudi Arabia, its most important member, softened his stance against his arch rival Iran, and by the increasing pressure of low oil prices.

Two sources of the OPEC said the group will reduce its pumping to 32.5 million barrels per day from the 33.24 million, which are currently producing.

“The OPEC has reached an exceptional decision today (…) After two years and a half, OPEC has a consensus to manage the market”, confirmed the minister of energy of Iran, Bijan Zanganeh, the agency SHANA.

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The producers will have to agree on the levels of pumping of each country at its next formal meeting in November, when you could extend an invitation to countries that do not belong to the group, like Russia, to join the cuts, added the sources.

oil prices rose more than 5% on $ 48 per barrel, after learning of the outcome of the meeting in Algeria, that surprised the operators. However, some wanted to know details.

The Brent wins 5.18% to 48.35 dollars per barrel (dpb), while the crude oil of the united States is advancing 4.61% to 46.73 dpb, according to Bloomberg data at 15:15 hours.

“we don’t know yet who is going to produce much. I want to hear from the mouth of the minister of Petroleum of Iran that is not going to return to the levels prior to the sanctions. In regard to the saudis, it goes against everything you have been saying,” said Jeff Quigley, director of energy markets of Stratas Advisors.

The minister of Energy arabia, Khalid al-Falih, said on Tuesday that Iran, Nigeria and Libya could produce at maximum levels that make sense” as part of any production limit that may be agreed upon at the November meeting.

This represents a shift in the strategy of Riyadh, who had previously said that they would reduce the pumping only if all of the producers inside and outside OPEC add to the initiative. Iran has argued that it should be exempt from these limits while your pumping is recovered after removal of sanctions of the European Union.

The economies arabia and iran are heavily dependent on oil, but in the scenario post-sanctions Tehran faces a lower pressure by the 50 percent drop in crude oil prices from 2014.

Riad, on the other hand, faces the second year of a budget deficit record and has been forced to reduce the salaries of Government employees.