The sudden shift in OPEC’s policy from maximum output to its traditional role price-fixing cartel is seen as a response to diminishing the ongoing global supply glut and as a band-aid for ailing finances among oil-producing countries.
“This should be a wake-up call for skeptics who have argued the death of OPEC,” Amrita Sen, chief oil analyst at Energy Aspects Ltd, told Bloomberg. “The group wants to push inventories down.”
Other non-OPEC oil suppliers may also join in the cuts. For instance, Russia, the largest producer outside of the bloc, has stated it is ready to participate in reductions if OPEC agrees on individual country quotas.
“It’s a good day for the oil market, it’s a good for the oil industry,” Saudi Energy Minister Khalid al-Falih, told to the Wall Street Journal. “Our friends from Russia and other non-OPEC countries have agreed to reciprocate and contribute significant volumes of cuts starting in January next year.”
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