Oil in Global Economy Series: Details of production cuts delivered by OPEC

Confounding the skeptics, members of the OPEC delivered a comprehensive deal that would see the production from cartel cut by 1.2 million barrels per day to 32.5 million barrels per day, effective from January next year. In its deal statement, OPEC said that the current market conditions are counterproductive and damaging to both producers and consumers, and is neither sustainable nor conducive in the medium to long-term. It threatens the economies of producing nations, hinders critical industry investments, jeopardizes energy security to meet growing world energy demand, and challenges oil market stability as a whole.

The agreement is valid for only six months and extendable up to another six months depending on the market conditions. The members established a monitoring committee composed of Algeria, Kuwait, Venezuela, and two non-OPEC countries. The non-OPEC countries including Russia would cut production by 600,000 barrels per day. The membership of Indonesia, which is a net importer of oil was suspended. 

Despite all the skepticism and war of words between Iran and Saudi Arabia, both seem to have compromised. Iran would produce no more than 3.8 million barrels per day and Saudi Arabia delivered a larger production cut to 10.06 million barrels per day. The details of the production cuts and agreed levels of output are shown in the chart.