Opec agrees 'historic' oil production cut

OPEC President Mohammed Bin Saleh Al-Sada said at a press conference following the six-hour long extraordinary meeting, that the cartel’s members have reached an agreement to limit their oil output.

The OPEC official praised Algeria’s efforts, "which provided a sort of an opportunity to bring us together and decide on an important issue regarding the oil market."

Al-Sada said the participants agreed to form a committee to look into the production shares of each member state. The committee will then report back at the next OPEC meeting, which will be held in Vienna in November.

He further noted that the committee is also meant to coordinate joint accords among the cartel’s members in a bid to expedite the process of rebalancing the oil market. He said both OPEC and non-OPEC producers (in reference to Russia) should share the burden of production adjustment.

Asked if the outcome of the Algiers’ meeting will send oil prices higher, he noted that the market alone controls the prices.

Earlier on Wednesday, reports emerged that Algeria has proposed that OPEC members cut their oil output by 796,000 barrels per day.

The North African country suggested that Saudi Arabia, the top oil producer, cap its output at around 10.3 million barrels per day. It also proposed that Iran limit its production to 3.7 million barrels per day.

Algerian Prime Minister Abdelmalek Sellal on Tuesday met with Saudi Arabian Deputy Oil Minister Prince Salman bin Abdul Aziz bin Salman Al-Saud and Iranian Oil Minister Bijan Namdar Zanganeh.

Sellal tried to narrow the differences between Iran and Saudi Arabia to facilitate the informal OPEC meeting seen as an opportunity to agree on output freeze or cut.

Algeria has been exerting significant diplomatic efforts over the past months to persuade OPEC and non-OPEC producers to gather in Algiers for an "informal" meeting to revive the slumping oil market.

Algerian Minister of Energy Noureddine Bouterfa said earlier this week that oil prices of between US$50-60 per barrel would be beneficial for both consumers and producers as it would help maintain investment and therefore guarantee the availability of this primary energy product in the long term, Xinhua reported.

(A026)