A production cut of 500,000 bpd has been agreed by the OPEC+ and that on Friday sent the prices of oil higher. In the trading that happened midday, the WTI was a little less than $60 per barrel as Brent inched closer to the mark of $65.
All in all the 1.2 million barrel in a day cut from the OPEC is going to rise to 1.7 million barrels per day. On Thursday, the details had been reported, however, upon making it official on this Friday, it was also assured by Saudi Arabia to the market that it is going to continue with their voluntary cuts beyond the requirement levels.
With the inclusion of the Saudi cuts, the total amount of contribution sees a rise to 2.1 million barrels per day in reductions. The deal is set to become effective from the month of January and the group is going to meet once again in the month of March. Out of the 500,000 barrels per day of extra cuts, OPEC is going to take the responsibility of 372,000 barrels per day and the group not from OPEC which is led by Russian is going to take the responsibility of 131,000 barrels per day.
In their statement, OPEC had noted the importance of every country being compliant with their production adjustments voluntarily. This has been seen as calling those countries out which have fallen short of their compliance for a large part of the year like Nigeria and Iraq.
The deal though is going to last only till the month of March. While there can surely be an extension and OPEC+ is begging to think that this surplus may well be solvable and temporary.