Oil price topped $93 a barrel on Wednesday as the Organisation of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to a major cut in the global production quota.
The group made the decision at the end of the 33rd in-person OPEC and non-OPEC ministerial meeting held in Vienna, Austria, on Wednesday.
OPEC+ agreed to cut production by 2 million barrels per day (bpd) from the market, starting from November 2022.
The move comes across as the oil cartel’s deepest cut in oil production since the 2020 COVID-19 pandemic, despite pushbacks from the United States (US).
The US had pressured the organisation to suspend its plans for a deep cut.
However, OPEC+ said the decision was in the light of the uncertainty that surrounds the global economic and oil market outlooks and the need to enhance the long-term guidance for the market.
It said the cut was also in line with the successful approach of being proactive and preemptive “which has been consistently adopted by OPEC and non-OPEC participating countries in the declaration of cooperation”.
Therefore, at the recent meeting, the oil cartel said participating countries decided to “reaffirmed the decision of the 10th OPEC and non-OPEC ministerial meeting on 12 April 2020 and further endorsed in subsequent meetings including the 19th OPEC and non-OPEC ministerial meeting on 18 July 2021″.
“Extend the duration of declaration of cooperation until the 31st of December, 2023,” it said.
“Adjust downward the overall production by 2 mb/d, from the August 2022 required production levels, starting November 2022 for OPEC and non-OPEC participating countries as per the attached table.”
OPEC+ also said members reconfirmed the baseline adjustment approved at the 19th OPEC and non-OPEC ministerial meeting, and adjusted the frequency of the monthly meetings “to become every two months for the joint ministerial monitoring committee (JMMC)”.
It said members also agreed to hold the OPEC and non-OPEC ministerial meeting (ONOMM) every 6 months in accordance with the ordinary OPEC scheduled conference.
More so, the 13-member group granted “the JMMC the authority to hold additional meetings, or to request an OPEC and non-OPEC ministerial meeting at any time to address market developments if necessary”.
It also extended the compensation period to March 31, 2023, stating that compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC ministerial meeting.
While reiterating the importance of adhering to full conformity, the group slated its next meeting for December 4, 2022.
Meanwhile, following the organisations resolutions, Brent crude jumped over 2 percent to $93.70 a barrel, while West Texas Intermediate crude jumped 1.85 percent to trade at $88.12 a barrel.
Last month, OPEC and its allies had agreed to cut the production quota by 100,000 barrels per day (bpd).
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