The Organisation of the Petroleum Exporting Countries, OPEC, has agreed to cut oil production for the first time since 2008.
The decision, which will see 1.2 million barrels cut per day from January 1, 2017, is aimed at shoring up the price of crude, and ending a record glut that has badly affected economies around the world, including Nigeria’s.
The decision is expected to help countries like Nigeria, although the country was exempted from the reduction due to cases of oil pipeline vandalism that have affected its production for months.
Oil prices rose Wednesday by nearly eight per cent.
The resolution to cut production was taken at the 171st meeting of the group in Vienna, Austria.
Qatari Minister of Energy and President of OPEC, Mohammed Bin Saleh Al-Sada, said at a press conference Wednesday that “We have made a great success today”.
“With the co-operation and understanding of all member countries, we have been able to reach an agreement,” he said.
“This agreement comes from a sense of responsibility for OPEC member companies, and for non-OPEC member countries, and the health and wellbeing of the world economy.”
He said the oil market needs to be rebalanced, and that needs “courageous decisions from OPEC and with the support of other countries”.
The agreement is contingent on non-OPEC members agreeing to cut their own output by 600,000 per day, he added.
He also revealed that Russia has already agreed to reduce output by 300,000 per day.
OPEC also set up a new ministerial monitoring committee to ensure compliance with this deal. The committee is chaired by Kuwait, Venezuela and Algeria.