OPEC Agrees To Deeper Oil Production Cuts

The Saudi Arabia-led OPEC and a 10-nation coalition led by Russia have agreed to deeper oil production cuts in order to prevent oversupply. The new deal will apply for the first three months of 2020. The oil exporting countries have recommended deepening existing production cuts of 1.2 million barrels per day, or bpd, by another 500,000 bpd. A cut of 1.7 million bpd would amount to 1.7% of global supply. Saudi Arabia was purportedly interested in reducing output as the Arab country needs to anchor oil prices just before the IPO of the state-run oil company Saudi Aramco. Existing supply curbs of 1.2 million bpd, which prevents excess supply, were set to expire in March. "We really do see some risks of oversupply in the first quarter due to lower seasonal demand for refined products and for crude oil," Russian Energy Minister Alexander Novak said, according to Reuters. Novak said the cuts would last through the first quarter of 2020, a shorter timeframe than suggested by some OPEC ministers, who have called for extending cuts until June or December 2020.