Members of the Organization of Petroleum Exporting Countries agreed to cut their production levels by slightly more than 1 million b/d effective Jan. 1, 2017, to 32.5 million b/d from the cartel’s October production of 33.6 million b/d.
OPEC delegates said the decision did not involve a change in production quotas but rather what OPEC is calling “an adjustment.”
In a statement, OPEC said, “The market rebalancing is under way,” adding that investment levels in oil and gas dropped worldwide in 2015-16 as a result of low oil prices.
The OPEC agreement was reached in Vienna with the expectation that key non-OPEC countries will adjust production downward by 600,000 b/d. Russia is expected to account for 300,000 b/d of that 600,000 b/d, OPEC officials said.
Saudi Arabia, OPEC’s biggest producer, agreed to reduce production by 486,000 b/d, officials said in a news conference.
Meanwhile, Indonesia—currently a net importer of crude oil—decided to suspend its OPEC membership. OPEC spokesmen said Indonesia could return to the cartel in the future.
The next OPEC meeting is slated for May 25, 2017, and the production adjustment could be extended for 6 months, said Mohammed Bin Saleh Al-Sada, OPEC president and Qatar Energy Minister.