Oil prices rose on Friday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to deepen output cuts to 500,000 additional barrels per day as the two-day meeting concluded in Vienna, Austria on Friday.
This new deal reached means the production cut will move from 1.2 million to 1.7 million less production per day.
On the back of this, the international oil benchmark, the Brent crude futures, traded up at $64.36 per barrel after gaining 97 Cents or 1.53 percent, while the WTI crude rose by 72 cents equivalent to 1.23 percent to trade at $59.15 per barrel.
There had been talks that the cartel and its allies will discuss the necessary issues concerning oil supply in 2020 when they meet in the Austrian capital city of Vienna on December 5 and 6 with reports showing that oil cut could be extended by 400,000 barrels per day.
However, after the conclusion of the meeting on Friday, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, told reporters that the kingdom’s quota would be an additional 167,000 barrels per day.
He also noted that they would continue to exceed their quota by an additional 400,000 barrels a day, which means the overall production cut will be closer to 2.1 million barrels a day depending on other countries, particularly Nigeria and Iraq willingness to abide by their allocation.
On its part, Russia, through its Energy Minister, Alexander Novak, said the country’s quota would be 300,000 barrels per day during the first three months of 2020 as condensates would no longer be quoted as part of output for countries.
The cartel and its allies had earlier in January agreed to cut production output by 1.2 million barrels per day in a deal that would run till March 2020.
However, one thing that isn’t clear is when this new deal will run through but the allied group said it plans to review the policy at an extraordinary meeting scheduled for March 5-6, 2020.