Opec and its non-Opec allies agreed today to deepen their prevailing 1.2mn b/d production cut target by 500,000 b/d in the first quarter next year. This was widely expected, but in a surprise move Saudi Arabia said it and other countries will continue a voluntary reduction of 400,000 b/d on top of that.
The new quotas agreed today "would lead to total adjustments of 1.7mn b/d", Opec said. "In addition, several participating countries, mainly Saudi Arabia, will continue their additional voluntary contributions, leading to adjustments of more than 2.1mn b/d." This is on condition that there is "full conformity by every country" participating in the deal, Opec said.
Of the 500,000 b/d of additional cuts, 372,000 b/d will come from Opec members and 131,000 b/d from non-Opec.
Saudi Arabia's new production ceiling will be 9.74mn b/d in the first quarter next year, compared with its current 10.31mn b/d quota. The country produced 9.9mn b/d in November, according to Argus estimates.
Russia has agreed to cut an additional 70,000 b/d in the first quarter, taking its overall reduction target to around 300,000 b/d. Condensate will no longer be part of Russia's quota — its baseline figure from October 2018 has been adjusted accordingly.
Iraq — one of the deal's serial quota busters — has agreed to reduce its existing 4.51mn b/d limit by 50,000 b/d. Iraq produced 4.63mn b/d last month, Argus estimates.
Other notable adjustments include the UAE and Kuwait, which have agreed to trim their existing quotas by a further 60,000 b/d and 55,000 b/d, respectively.
Opec and its non-Opec allies — known collectively as Opec+ — will meet again in early March to review production policy.