x Abu Dhabi, UAEThursday 27 July 2017

Opec likely to OK 2 million barrel oil output cut

Opec powerhouse Saudi Arabia said Wednesday the group will slash a record 2 million barrels.

ORAN// Opec powerhouse Saudi Arabia said Wednesday the group will slash a record 2 million barrels from its daily production as of Jan 1, while Russia and other OPEC outsiders announced their own cutbacks of hundreds of thousands of barrels from the market. The Saudi oil minister Ali Naimi said there was an Opec consensus ahead of a formal agreement later in the day for the cut. An official decision to pare 2 million barrels from output all at once would be a first for the organization; an Opec reduction of that size four years ago was enacted in stages. Oil prices rose above $45 a barrel Wednesday in anticipation of the record OPEC reduction. By midday in Europe, light, sweet crude for January delivery was up $1.66 to $45.26 a barrel in electronic trading on the New York Mercantile Exchange. Also significant would be formal support from Russia, Azerbaijan and other non-Opec producers. Mexico, Norway and Russia slashed production in the late 1990s, at a time oil was selling for about $10 a barrel. Mr Naimi first mentioned the 2 million figure in Oran on Tuesday, the eve of the oil ministers' decision-making meeting. On Wednesday he said the ministers were likely to agree "on a reduction of 2 million barrels per day from what we are doing today ... a significant cut." He added that the cuts will be effective Jan. 1 "We also hope that other producers who are not in OPEC will chip in for the purpose of bringing stability to the market," he said, in a nod to Russia, the top oil producer after the Saudis.

*AP