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OPEC and Russia agree to slash oil production by 1.2m bpd

Saudi energy minister Khalid al-Falih, right, and Russian Energy Minister Alexander Novak speak at a news conference Friday in Vienna after the OPEC meeting. PHOTO: FLORIAN WIESER/SHUTTERSTOCK
OPEC and a coalition of oil producers led by Russia reached an agreement Friday to join in a significant production cut by 1.2 million barrels a day (bpd).

"This is a major step forward," said United Arab Emirates’ Energy Minister Suhail Mohamed al-Mazrouei, who chairs regular OPEC meetings in Vienna.

The decision came three days after Iraqi Oil Minister Thamer Ghadhban said that OPEC should devise a long-term strategy to stabilize the price of crude oil and reduce damage to oil markets affected by geopolitics.

The Organization of the Petroleum Exporting Countries along with Russia and its allies will curb oil output by a collective 1.2 million barrels a day, under the deal. OPEC nations would cut 800,000 barrels and the Russia-led group would handle the remainder.

Iraq, OPEC’s second-largest oil producer following Saudi Arabia, almost completely relies on oil to generate its revenue. Over the past few years, the country has faced budget deficits due to the market’s unstable oil prices. 

Iraqi officials have been lobbying for a cut in production in recent months, in contrast to US President Donald Trump, who has been publicly pushing for the opposite. On Wednesday, he tweeted, "Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!"

Following two days of meetings, OPEC said they would cut 800,000 barrels per day for six months from January, though some countries such as Iran, which is facing US sanctions, have been given an exemption. The balance, according to AP, will come from Russia and other non-OPEC countries.