OPEC nations agree to limit oil production to reduce global glut

For the first time since the global financial crisis eight years ago, member nations of the Organization of the Petroleum Exporting Countries (OPEC) have reached preliminary agreements to put a restriction on oil production in an effort to reduce a global oversupply of crude that has depressed oil prices for more than two years and weakened the economies of oil-producing nations.

According to the preliminary deal that was reached after several hours of talks in Algiers, Algeria, output from OPEC nations will be limited between 32.5 million and 33 million bpd (barrels per day), said Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of OPEC. Current OPEC output is estimated at 33.2 million bpd.

Output levels will be finalized at an OPEC meeting in Vienna in November.”We reached a very positive deal,” said Nigerian Oil Minister Emmanuel Ibe Kachikwu. He said all countries will reduce output but the specific quotas will be set in November.

Hopes for a deal have been dimmed by the long-running disagreements between regional rivals Saudi Arabia and Iran.

Iran has been trying to restore its oil industry since it has emerged from international sanctions over its nuclear program earlier this year, and so has been resistant to cutting production. According to the preliminary deal, Iran will be allowed to increase production to 3.7 million bpd, according to Algerian participants at the meeting.

Iran has been aiming to produce 4 million bpd but is currently estimated to be pumping around 3.6 million bpd.

Algerian officials, who shuttled the night before and on the day of the talks among participants to try to reach common ground on how to support oil markets, have been rewarded with a victory with the decision. The OPEC officials met informally on the sidelines of an energy conference in Algiers.

“Our optimism was vindicated,” said Energy Minister Noureddine Boutarfa. “The decision was unanimous, and without reservations.”