Non-OPEC producers to cut output by 562,000 bpd as part of global deal

Non-OPEC oil producers agreed on Saturday to reduce their output by a combined 562,000 barrels per day as part of a global deal with the Organization of the Petroleum Exporting Countries, two OPEC sources told Reuters.

Earlier in the day, Russia and Saudi Arabia had said they expect OPEC and non-OPEC producers to reach an agreement to curtail oil output and prop up prices in the first such joint move since 2001.

“We have a deal already. We are just putting the final touches. Everything is good!” Khalid al-Falih, energy minister of OPEC’s de facto leader and top oil exporter Saudi Arabia, told reporters.

Russian Energy Minister Alexander Novak, speaking as he joined a breakfast with OPEC and non-OPEC ministers in Vienna, said: “I don’t see such risks (of a deal failing).”

The Organization of the Petroleum Exporting Countries will meet producers from outside the group later in the day, hoping non-OPEC will commit to cutting 600,000 barrels per day after its own members agreed a reduction of 1.2 million bpd last week.

OPEC Secretary-General Mohammed Barkindo said he expected 12 non-OPEC countries to sign a declaration with the organization and fully contribute to cuts of 600,000 bpd or more.

Boost for global economy

“For non-OPEC expect cuts of 600,000 barrels per day or more...This is a very historic meeting ... This will boost the global economy and will help some OECD countries to reach their inflation targets,” Barkindo told reporters, referring to the Organisation for Economic Cooperation and Development, which
groups most of the world’s richest economies.

OPEC sources said non-OPEC Azerbaijan, Kazakhstan, Oman, Mexico, Russia, Sudan, South Sudan, Bahrain and Malaysia would attend the meeting. Bolivia may also attend and Barkindo said Brunei had sent its commitments but would not be present.

Many non-OPEC countries such as Mexico and Azerbaijan face a natural drop in oil production and several OPEC ministers going into the breakfast said the discussions would focus on whether those declines should be counted as contributions.

On Friday, Saudi Arabia told its US and European customers it would reduce oil deliveries from January, signaling it had already started implementing cuts.

OPEC producers Iraq and Kuwait have also told buyers of their crude about planned reductions.

From the non-OPEC camp, so far only top global oil producer Russia and Oman have pledged cuts, with OPEC and non-OPEC sources saying Mexico could contribute as much as 150,000 bpd.

In contrast, Kazakhstan plans to boost output in 2017 as it launches the long-delayed Kashagan project.