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OPEC reaches oil production limiting deal

September 28, 21:37 updated at: September 29, 6:00 UTC+3
Iran’s Minister of Petroleum Bijan Namdar-Zanganeh said it was decided to decrease oil production by 700 barrels a day to the upper limit of 32.5-33 million barrels
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© EPA/MOHAMED MESSARA

ALGIERS, September 29. /TASS/. OPEC member nations, which gathered for an informal meeting in the framework of the 15th international energy forum in Algiers, reached an agreement on Wednesday to freeze daily crude oil output at 32.5-33 million barrels.

According to OPEC President Mohammed Bin Saleh Al-Sada, a special commission will be set up within OPEC to set individual production level for each of the organization’s member countries.

Iran’s Minister of Petroleum Bijan Namdar-Zanganeh said it was decided to decrease oil production by 700 barrels a day to the upper limit of 32.5-33 million barrels. The final decision, in his words, is yet to follow by OPEC summit in November. However he said his country is not planning to freeze its oil output.

Following reports on OPEC’s oil production restriction deal, Brent oil with delivery in November 2016 rose by 4.6%, to 48.35 U.S. dollars per barrel, at London’s ICE.

The OPEC president commended the agreement as giving positive signals to the market.

However ahead of the forum, its participants expected no final agreements. Nevertheless, Venezuela’s Minister of Petroleum and Mining Eulogio Del Pino did not rule out a possible consensus. Russia, which is not an OPEC member, was not invited to the meeting. Russian Minister of Energy Alexander Novak said that Russia will take part in an OPEC meeting with oil producing countries should it be organized.

While in Algiers, the Russian energy minister held a series of bilateral meetings with his counterparts from Saudi Arabia, Iran, Venezuela, Qatar and other countries, and with the OPEC secretary general. After these meetings, he said they were focused on measures to stabilize the oil market. In his words, positions of countries on possible oil production freeze have become more flexible and result-oriented. He said exclusions concerning oil output could be made for Iran which has recently gotten rid of the sanctions, and for Libya and Nigeria where oil production decreased due to force majeure events.

Such possibility was confirmed by Saudi Minister of Energy, Industry and Mineral Resources Khalid bin Abd al-Aziz al-Falih. Iran, in turn, has pledged to join the market stabilization measures as soon as it reached the pre-sanction production level of about four million barrels a day. Iran’s Minister of Petroleum Bijan Namdar-Zanganeh said on the sidelines of the forum on Wednesday he has received no such proposals.

The issue of potential freezing of global crude production was revived after Russian President Vladimir Putin said on September 2 that Russia supports the agreement with OPEC to curb oil production growth. He expressed hope that other oil producers would support the initiative.

On the sidelines of the Group of Twenty summit in early September, Moscow and Riyadh, which control more than 21% of the global oil consumption, inked a joint statement geared to stabilize the oil market. As Novak said back then, the two countries were discussing possible oil production freeze for three or six months.

According to the Russian energy minister, an oil production freeze deal might speed up balancing of market demand and supply by three to six months but such a deal requires coordinated positions of OPEC member nations.

The previous meeting on crude production freeze took place in Qatar’s Doha on April 17. Representatives of 18 oil-producing countries (Iran refused to participate) failed to reach an agreement on oil production cap and after 12 hours of talks said they needed more time for consideration.

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