- Title: OPEC, non-OPEC agree first global oil pact since 2001
- Date: 12th December 2016
- Summary: UNKNOWN LOCATION, UNITED KINGDOM (RECENT - FILE) (REUTERS) VARIOUS OF BP PETROL STATION/CUSTOMERS PUMPING GAS VARIOUS OF SHELL PETROL STATION/CUSTOMERS PUMPING GAS
- Embargoed: 27th December 2016 11:15
- Keywords: OPEC non-OPEC agree first global oil pact 2001
- Location: LONDON, ENGLAND, UK + UNKNOWN LOCATION, RUSSIA, SAUDI ARABIA
- City: LONDON, ENGLAND, UK + UNKNOWN LOCATION, RUSSIA, SAUDI ARABIA
- Country: Various
- Reuters ID: LVA0075CKVNGT
- Aspect Ratio: 16:9
- Story Text: Oil rose by as much as 6.5 percent on Monday (December 12) to an 18-month high after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to try to tackle global oversupply and boost prices.
Brent crude futures were up $2.38 at $56.72 per barrel by 1002 GMT, having hit a session peak of $57.89, the highest since July 2015.
The price is 50 percent higher than at this time last year, marking the largest year-on-year rise on any given day since September 2011.
U.S. crude futures were up $2.46 at $53.96 a barrel.
"It is quite significant that non-OPEC nations have fallen in line quite so decisively with OPEC but of course the big announcement was that form the Saudi Oil minister who rather crashed the party, really suggesting that you'll get bigger cuts coming in the New Year. So essentially that really throws the new dynamic into the mix that you'll have an environment where we might actually be looking at an oil market that moves into deficit territory, in terms of supply, for the first time in quite a long time," said Chris Beauchamp, Senior Market Analyst, IG.
After nearly a year of wrangling, the Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut output by 1.2 million bpd for six months from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd to curb the oversupply that has dogged markets for two years.
On Saturday, producers from outside OPEC, led by Russia, agreed to reduce output by 558,000 bpd, short of the target of 600,000 bpd but still the largest contribution by non-OPEC ever.
But for the deal to be effective, all parties must stick to their word added Beauchamp.
"It could mark a sea change in the oil market going into 2017. It's definitely one to watch I think. But as ever with these OPEC and non-OPEC nations, the proof of the pudding is in the eating, so let's not get our part hats on too soon."
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