Russia and several other non-OPEC nations pledged to curb oil production next year by more than 600,000 barrels a day at a meeting in Vienna on Saturday, joining forces with the Organization of Petroleum Exporting Countries (OPEC) to end a global glut, a delegate familiar with the situation said.
The pact – the first between the two sides in 15 years – comes two weeks after OPEC agreed to reduce its own production by 1.2 million barrels a day. It’s unclear whether the non-OPEC cuts include natural declines from countries such as Mexico, or consist entirely of genuine production cuts, Bloomberg reported.
"We managed to gather 25 countries from OPEC and non-OPEC with the idea of stabilizing the oil market and defending a fair price for our commodity," Venezuelan Energy Minister Eulogio del Pino said before the meeting.
Russia had already announced its plans to reduce production by 300,000 barrels a day next year, down from a 30-year high last month of 11.2 million barrels a day.
In a surprise move, Kazakhstan pledged a modest output cut after coming under strong diplomatic pressure, delegates said, asking not to be identified before an official announcement.
The International Energy Agency expected the Asian nation to boost production in 2017 by 160,000 barrels a day after a giant oilfield started pumping.
The agreement represents the strongest effort yet by oil-rich countries, from giants such as Saudi Arabia and Russia to tiny producers including Bolivia and Equatorial Guinea, to end a market share war that has shaken investors, hit energy companies and damaged economies.
Oil prices have surged more than 15 percent since OPEC announced it will cut production for the first time in eight years, rising this week briefly above $55.
Although prices are well below the $100 a barrel level prevailing since the market share war started, they have more than doubled since January.
The price rise has brought breathing space to oil-rich economies and propelled the share prices of energy groups from major companies such as Exxon Mobil Corp. to shale firms such as Continental Resources Inc.
If OPEC and non-OPEC countries stick to their promises, the oil market could turn into a deficit by the second half of the year, boosting prices.
OPEC production reached an all-time high of nearly 34.2 million barrels a day, well above the group’s target of 32.5 million barrels a day from January. Libya and Nigeria are exempted from the OPEC output cuts, while Iran has room to boost its output.