OPEC announces oil production rollback

Saudi Arabian oil minister Khalid al-Falih during OPEC's meeting in Vienna on Wednesday. Photo by Joe Klamar/AFP/Getty Images

VIENNA, AUSTRIA – The CBC News is reporting that OPEC has agreed to cut oil production by 600,000 barrels per day in January.

The oil cartel’s move today to cut output for the first time in eight years means that world output from both OPEC and non-OPEC countries will sit at roughly 32.5 million barrels a day, down by 1.2 million barrels. The price of West Texas Intermediate crude was up 7.5 per cent, trading at US$48.94 per barrel as the oil ministers of OPEC countries sorted out which countries would cut production, and by how much.

After two days of meetings in Vienna, OPEC announced that all members with the exception of Indonesia agreed to lower production in what it hopes will be a binding agreement. As a result of not agreeing to cut production, Indonesia was suspended from the organization.

OPEC says other non-OPEC countries are also expected to contribute to the cut. Saudi Arabia shouldered the bulk of the cut, about 486,000 barrels at day from its output of 10.56 million barrels a day. Russia, a non-OPEC member, has also agreed to pull back their oil production by 300,000 barrels/day.

Despite the cut in production, OPEC’s announcement is not expected to restore crude prices back above US$100 that a barrel fetched in June of 2014, before increased output from the U.S. and other non-OPEC countries led to oversupply.

Story courtesy CBC News with files from Reuters: