TEMPO.CO, Jakarta - The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut down its oil production capacity for the first time since 2008. The agreement was made on Wednesday, November 30, 2016, after Saudi Arabia accepted proposals to lower its oil production output and withdraw any charges previously filed against Iran, the country’s main rival in the oil industry.
Russia, which is not a member of OPEC said that it will also cut down oil production capacity for the first time in the last 15 years in a bid to help raise global oil price.
Following reports of the agreement, benchmark price for the Brent Crude increases by nine percent to around US$50 per barrel.
"OPEC has denied critics, the organization is not over yet. The [production reduction] will accelerate and help balance the market from global oil over supply," said Armita Sen, OPEC observer from Energy Aspects energy consultant company.
OPEC currently produces one-third of the total oil produced globally, which equals to 33.6 million barrels per day. The reduction would lower the organizations oil production by 1.2 million barrels per day.
ANTARA
