All Organisation of Petroleum Exporting Countries (Opec) members agreed on November 30 to cut their oil output to 32.5mn b/d, with Iran agreeing to cut “theoretical output” to just under 3.8mn b/d for January to July, according to several sources covering the meeting in the Austrian capital Vienna.
Iran had refused to cut its future production, stating that it wished to return to pre-sanctions levels before it would cut its output. But it agreed to cut from its future predicted output, which was assessed as 3.975mn b/d, the figure prior to sanctions in July 2005.
The deal will halt future expansion of Iran's oil production but will not actually affect day-to-day operations which are currently under the 3.797mn b/d cap.
The deal has helped the Rouhani government's relations with Saudi Arabia, the Islamic Republic’s biggest detractor in the oil producing group. Previously Saudi Arabia stepped up calls for Iran to join Opec and threatened to walk away from a deal if it didn't. Riyadh also has a growing issue with Iraq, which like Iran is aiming to push its production levels up in the next few years.
Saudi Arabia, Kuwait and the UAE all made the biggest cuts during the latest meeting.
Different oil producers, both members and non-members of Opec, have various fiscal break-even oil prices, which determine the different approachs to output cutting.
Russia would have to see a $69 per barrel oil price to balance its budget, while Algeria, Ecuador, and Venezuela require the oil price to reach $90.6, $104.69 and $117.5 per barrel, respectively, Bloomberg reported.
Global oil prices rose more than 9% following the agreement, with renewed confidence in the black stuff. Brent crude was up 0.91% to $52.31 a barrel, West Texas Intermediate was up 075% to $49.81 05:00 GMT on December 1.
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