The meeting was planned to discuss the contribution that producers outside OPEC will make to a proposed supply-limiting agreement. OPEC oil ministers meet on Wednesday in an effort to finalize their deal.

"There is an official letter from (Saudi Arabia) saying (it is) not attending the meeting because the ministers should agree to the cut and then present the agreement to non-OPEC countries," an OPEC source said. "This will be more effective‎."

The Organization of the Petroleum Exporting Countries is trying to cement a preliminary September agreement in Algeria that would reduce its production to between 32.5 million and 33 million barrels per day, its first supply curb since 2008.

OPEC aims to remove a supply glut and prop up oil prices, which at below $48 a barrel are less than half their level of mid-2014. Oil prices extended an earlier decline on Friday after news of the Saudi no-show.

The organization also wants non-OPEC producers such as Russia to curb output. Russian Energy Minister Alexander Novak on Thursday said OPEC had proposed that non-OPEC cut oil production by 500,000 bpd.

The Monday talks were still scheduled to go ahead and a Russian source familiar with the matter said Russia planned to attend.

A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.

Saudi Arabia had asked that this earlier meeting be called off, but was convinced by other members to attend in order not to embarrass the group, a source said.

Despite extensive diplomacy, the OPEC side of the deal still faces setbacks from Iraq's call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.

A meeting of OPEC experts this week made some progress in how to implement the cut, but Iran and Iraq raised conditions for participating, according to sources.

"We have to solve our problems as OPEC first. We have not achieved an agreement within OPEC," a Gulf source familiar with Saudi oil thinking said on Friday.

"Before we meet with non-OPEC and ask them to participate in any action, we have to have an‎ agreement that is credible with clear numbers and a system that the market believes."

OPEC last persuaded non-OPEC nations to make joint cuts at the start of the millennium. Nonetheless, OPEC believes rival producers need to help in the current effort.

Its Economic Commission Board, comprised of the national representatives of the 14 member countries who report to their respective oil ministers, concluded a two-day meeting at the group's Vienna headquarters on Thursday.

"We concluded that non-OPEC should participate in the cut as OPEC alone can't get balance back to the market," said a source familiar with the matter, who declined to be identified as the talks were private.

Ahead of next Wednesday's OPEC meeting, ministers are still trying to find agreement. Algerian Energy Minister Nouredine Bouterfa said he would visit Tehran on Saturday and meet his Iraqi counterpart in Vienna on Monday for more talks.

"We have held lengthy discussions with our counterparts about practical questions and we remain optimistic that the Vienna meeting will consolidate the historic agreement obtained in Algiers," Bouterfa told state news agency APS, referring to the talks in September that yielded a preliminary deal. </s> DUBAI/LONDON (Reuters) - Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first.

OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina/File Photo

The Nov. 28 meeting in Vienna was planned to discuss the contribution that producers outside OPEC will make to a proposed supply-limiting agreement. OPEC oil ministers meet on Wednesday in an effort to finalize their deal.

“There is an official letter from (Saudi Arabia) saying (it is) not attending the meeting because the ministers should agree to the cut and then present the agreement to non-OPEC countries,” an OPEC source said. “This will be more effective‎.”

The Organization of the Petroleum Exporting Countries is trying to cement a preliminary September agreement in Algeria that would reduce its production to between 32.5 million and 33 million barrels per day, its first supply curb since 2008.

OPEC aims to remove a supply glut and prop up oil prices, which at below $48 a barrel are less than half their level of mid-2014. Oil prices extended an earlier decline on Friday after news of the Saudi no-show.

The organization also wants non-OPEC producers such as Russia to curb output. Russian Energy Minister Alexander Novak on Thursday said OPEC had proposed that non-OPEC cut oil production by 500,000 bpd.

Monday’s talks will be converted into another OPEC-only meeting, OPEC sources said, to try to resolve the group’s internal differences before the ministerial gathering on Wednesday.

A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.

Saudi Arabia had asked that this earlier meeting be called off, but was convinced by other members to attend in order not to embarrass the group, a source said.

NO CONSENSUS YET

Despite extensive diplomacy, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.

A meeting of OPEC experts this week made some progress in how to implement the cut, but Iran and Iraq raised conditions for participating, according to sources.

“We have to solve our problems as OPEC first. We have not achieved an agreement within OPEC,” a Gulf source familiar with Saudi oil thinking said on Friday.

“Before we meet with non-OPEC and ask them to participate in any action, we have to have an‎ agreement that is credible with clear numbers and a system that the market believes.”

OPEC last persuaded non-OPEC nations to make joint cuts at the start of the millennium. Nonetheless, OPEC believes rival producers need to help in the current effort.

Its Economic Commission Board, comprised of the national representatives of the 14 member countries who report to their respective oil ministers, concluded a two-day meeting at the group’s Vienna headquarters on Thursday.

The OPEC flag and the OPEC logo are seen before a news conference in Vienna, Austria, October 24, 2016. REUTERS/Leonhard Foeger/File Photo

“We concluded that non-OPEC should participate in the cut as OPEC alone can’t get balance back to the market,” said a source familiar with the matter, who declined to be identified as the talks were private.

Ahead of next Wednesday’s OPEC meeting, ministers are still trying to find agreement. Algerian Energy Minister Nouredine Bouterfa said he would visit Tehran on Saturday and meet his Iraqi counterpart in Vienna on Monday for more talks.

“We have held lengthy discussions with our counterparts about practical questions and we remain optimistic that the Vienna meeting will consolidate the historic agreement obtained in Algiers,” Bouterfa told state news agency APS, referring to the talks in September that yielded a preliminary deal. </s> Image copyright Reuters Image caption A worker checks a pipe in a Siberian oil field in Russia.

Eleven oil-producing countries, who are not members of the Opec oil cartel, have agreed to cut their output to boost prices.

The group of states, which includes Russia, said on Saturday that they will cut supplies by 558,000 barrels per day.

Opec announced last month that it would be slashing its own production to ease an oversaturated global market.

It is the first time in 15 years that a global pact has been struck.

"I am happy to announce that a historic agreement has been reached," said Qatar's Energy Minister, Mohammed Bin Saleh Al-Sada, whose country holds Opec's rotating presidency.

The agreement was made at a meeting at Opec's Vienna headquarters.

Opec, the Organization of Petroleum Exporting Countries, has already committed to halting the supply of 1.2 million barrels a day, starting from January.

Opec said then it was seeking for non-member states to also lower their output, and Russia had signalled it would co-operate.

The moves come after more than two years of depressed oil prices, which have more than halved since 2014, due to a supply glut on the market.

Among the non-Opec countries attending the meeting were Azerbaijan, Oman, Mexico, Malaysia, Sudan, South Sudan and Bahrain.

Opec will also have its next meeting on 25 May 2017 to monitor the progress of the deal.

What and who is Opec? </s> VIENNA -- OPEC ministers agreed Wednesday to cut crude-oil output, scrapping a strategy to squeeze U.S. competition through high supply that had backfired by gutting prices and draining the cartel's own economies.

It was the first agreement by the Organization of the Petroleum Exporting Countries cartel to reduce output since 2008.

The reduction of 1.2 million barrels a day is significant, leaving OPEC's daily output at 32.5 million barrels. And OPEC President Mohammed Bin Saleh Al-Sada said non-OPEC nations are expected to pare an additional 600,000 barrels a day off their production.

"The economics of this deal made so much sense for everybody," Jeff Currie, head of commodities research at Goldman Sachs Group Inc., said on Bloomberg TV. "All the parties involved should view this as successful."

The combined cut will result, at least in the short term, in somewhat more pricey oil -- and, by extension, gasoline, heating and electricity.

The price for Brent crude, the international benchmark for oil, jumped 8.3 percent, or $3.86, to $50.24 on Wednesday. West Texas Intermediate crude for January delivery rose $4.21, or 9.3 percent, to $49.44 a barrel on the New York Mercantile Exchange.

The average price for a gallon of gasoline nationally rose 2 cents Wednesday to $2.15, up from a $2.04 a year ago, according to auto club AAA. In Arkansas, gasoline cost $1.91 a gallon Wednesday, up from $1.87 a year ago.

In the longer term, analysts say it's unlikely that oil will return to the highs of around $100 a barrel last seen two years ago. That's partly because President-elect Donald Trump has promised to free up more oil drilling in the U.S., which would increase global supply. Demand is also not recovering as the world economy sags.

Calling the agreement "a historic moment," Al-Sada said Wednesday's move "will definitely balance the market and help [in] reducing the stock overhang."

Al-Sada said the OPEC cutback is to take effect Jan. 1, with consultations planned on the exact timing of the non-OPEC reductions. Russia alone is committed to taking 300,000 barrels a day off the market. A barrel of oil contains 42 gallons.

With the production cut, OPEC will not only benefit from gaining more dollars per barrel, but it can also lay claim once again to playing a part in influencing world prices.

And analysts said OPEC's tentative alliance with Russia and other non-OPEC nations may give it -- and them -- additional clout in future competition for market share with U.S. producers, which are sure to return in increasing numbers if crude prices move upward.

Wednesday's decision was a departure from years of infighting among members refusing to give up their market share and a resulting series of inconclusive meetings.

In another reflection of newfound discipline within the cartel, Al-Sada said Indonesia's membership had been suspended after it refused to accept its share of proposed output cuts, reducing the number of OPEC countries to 13.

Part of the focus after Wednesday's decision is how well it holds. OPEC gave up assigning quotas in part because members have ignored them in their quest for petrodollars.

But officials were displaying new confidence. In comments addressed to people who question his organization's relevance, Al-Sada said its decision "means the weight of OPEC and the resiliency of OPEC is still there and it will continue to be there."

"Today's unity is a very explicit sign about the position of OPEC," he said.

Meetings to turn the planned non-OPEC cuts into reality are planned next month in Doha, Qatar. From Moscow, Russian Energy Minister Alexander Novak confirmed his country's readiness to pare 300,000 barrels from its output, adding that it would happen gradually "within a short period of time based on technical capacity."

Al-Sada said the OPEC cutbacks are in effect for six months with the option of renewal after a review by a five-nation committee set up to monitor compliance.

Still, analysts suggested price upswings would be relatively moderate -- and the fallout minimal, at least for the United States. Sal Guatieri, senior economist at BMO Capital Markets, said oil should rise to an average $53 a barrel next year.

For the U.S. economy, that's "a sweet spot ... a high-enough price to spur investment in the energy industry but not enough to seriously drain purchasing power" of consumers, he said.

"The losers are Europe and Japan -- oil-importing regions of the world" with barely growing economies, said Guatieri.

Some of the best performers in U.S. stock markets Wednesday were those hardest hit by the downturn in oil prices that started in mid-2014 and accelerated five months later when OPEC declined to reduce output. California Resources Corp. and Oasis Petroleum Inc. were among the day's biggest gainers, posting advances of more than 25 percent each. Continental Resources Inc., whose majority owner Harold Hamm predicted as far back as 2014 that OPEC would crack before U.S. shale drillers, surged 25 percent.

"Assuming OPEC makes good on an apparent production-cut deal, U.S. oil production growth is all but guaranteed to return in 2017," said Joseph Triepke, founder of Infill Thinking, a Dallas-based oil research firm, and a former analyst at Citadel LLC's Surveyor Capital unit. "All U.S. [shale] plays will benefit, but none more than the Permian, where we estimate as many as 150 rigs could be reactivated next year if the OPEC deal holds."

Shares of rig operators and the companies that help explorers fracture and perform other technical tasks involved in pumping crude from the ground jumped the most in seven years, mirroring the gains for oil producers buoyed by the OPEC deal.

While an OPEC cut would be encouraging, investors should avoid "sharp recovery hype" and be selective, oil-field services analyst Matt Marietta told clients in a research note Wednesday.

"We reiterate our view that structurally oversupplied crude markets will take more time to balance," wrote Marietta, a Stephens Inc. analyst in Houston. "The math suggests an ongoing imbalance is likely to persist well into 2017, even with an OPEC cut, and no U.S. growth."

One of the biggest hurdles to Wednesday's deal had been a rivalry between Saudi Arabia and Iran, whose struggle for dominance in the Mideast is also playing out in OPEC.

The Saudis had long been hesitant to shoulder the lion's share of a cut, while Iran had resisted reducing its own production. It argued that it has yet to recover its output levels hit by years of sanctions and that the onus was on the desert kingdom to pare the most.

Reflecting their compromise, documents from the meeting showed the Saudis committed to chopping 486,000 barrels off the 10.544 million barrels they were pumping as of October. Iran's quota was set at 3.797 million barrels a day, down 90,000 barrels from October.

All other members cut as well, ranging from tiny Gabon's 9,000-barrel reduction to an Iraqi drop of a daily 210,000 barrels. Nonmember Russia was producing over 11 million barrels a day in October.

Information for this article was contributed by George Jahn, Kiyoko Metzler, Paul Wiseman and Vladimir Isachenkov of The Associated Press and by Joe Carroll, Alex Nussbaum, Alix Steel, Mark Shenk and David Wethe of Bloomberg News. </s> VIENNA — Breaking with years of inaction, OPEC agreed Wednesday to cut its oil output for the first time since 2008. The move effectively scraps its strategy of trying to squeeze U.S. competition through high supply — a strategy that backfired by lowering prices and draining the cartel's own economies.

The reduction of 1.2 million barrels a day is significant, leaving OPEC's daily output at 32.5 million barrels. And OPEC President Mohammed Bin Saleh Al-Sada said non-OPEC nations are expected to pare an additional 600,000 barrels a day off their production.

The combined cut will result, at least in the short term, in somewhat-more-pricey oil — and, by extension, gasoline, heating and electricity. The international benchmark for crude jumped 8.3 percent, or $3.86, to $50.24 on Wednesday.

In the longer term, however, analysts say it's highly unlikely that oil will return to the highs of around $100 a barrel last seen two years ago. That's partly due to the fact that President-elect Donald Trump has promised to free up more oil drilling in the U.S., which would increase global supply. Demand is also not recovering as the world economy sags.

Playing tribute to "a historic moment," Al-Sada said Wednesday's move "will definitely balance the market and help (in) reducing the stock overhang."

Al-Sada said the OPEC cutback is to take effect Jan. 1, with consultations planned on the exact timing of the non-OPEC reductions. Russia alone is committed to taking 300,000 barrels a day off the market.

With the production cut, OPEC will not only benefit from gaining more dollars per barrel; it can also lay claim once again to playing a part in influencing world prices.

And its tentative alliance with Russia and other non-OPEC nations may give it — and them — more clout in future competition for market share with U.S. producers, which are sure to return in increasing numbers if crude prices move upward.

Wednesday's decision was a departure from years of infighting among members refusing to give up their market share and a resulting series of inconclusive meetings.

In another reflection of new-found discipline within the cartel, Al-Sada said Indonesia's membership had been suspended after it refused to accept its share of proposed output cuts, reducing the number of OPEC countries to 13.

Part of the focus following Wednesday's decision is how well it holds. OPEC gave up assigning quotas in part because members have ignored them in their quest for petrodollars.

But officials were displaying new confidence. In comments addressed to nay-sayers about his organization's relevance, Al-Sada said its decision "means the weight of OPEC and the resiliency of OPEC is still there and it will continue to be there."

"Today's unity is a very explicit sign about the position of OPEC," he added.

Meetings to turn the planned non-OPEC cuts into reality are planned next month in Doha. From Moscow, Russian Energy Minister Alexander Novak confirmed his country's readiness to pare 300,000 barrels from its output, adding that it would happen gradually "within a short period of time based on technical capacity."

Al-Sada said the OPEC cutbacks are in effect for six months with the option of renewal after a review by a five-nation committee set up to monitor compliance.

Still, analysts suggested price upswings would be relatively moderate — and the fallout minimal, at least for the United States. Sal Guatieri, senior economist at BMO Capital Markets, said oil should rise to an average $53 a barrel next year.

For the U.S. economy, that's "a sweet spot ... a high-enough price to spur investment in the energy industry but not enough to seriously drain purchasing power" of consumers, he said.

"The losers are Europe and Japan — oil-importing regions of the world" with barely growing ecomonies, said Guatieri.

One of the biggest hurdles to Wednesday's deal had been a rivalry between Saudi Arabia and Iran, whose struggle for dominance in the Mideast is also playing out in the Organization of the Petroleum Exporting Countries.

The Saudis had long been hesitant to shoulder the lion's share of a cut, while Iran had resisted reducing its own production. It argued that it has yet to recover its output levels hit by years of sanctions and that the onus was on the desert kingdom to pare back the most.

Reflecting their compromise, documents from the meeting showed the Saudis committed to chopping 486,000 barrels off the 10.544 million barrels they were pumping as of October. Iran's quota was set at 3.797 million barrels a day, down 90,000 barrels from October.

All other members cut as well, ranging from tiny Gabon's 9,000 barrel reduction to an Iraqi drop of a daily 210,000 barrels. Non-member Russia was producing over 11 million barrels a day in October. </s> Oil prices fell sharply Friday after Saudi Arabia pulled out of a scheduled meeting with Russia and other oil producers outside the Organization of Petroleum Exporting Countries. OPEC and non-OPEC members were scheduled to meet Monday to discuss production cuts ahead of the 14-nation oil cartel’s Nov. 30 meeting.

At 2:55 a.m. EST Saturday, Brent crude oil, the global benchmark, was trading at $47.12 a barrel, lower by almost 4 percent, but dipped below the $47 mark several times in the preceding hour. WTI Crude, the U.S. benchmark, was trading at a loss of over 4 percent at $45.96 a barrel.

In the meeting between OPEC and non-OPEC producers, Russia, which along with Saudi Arabia is one of the world’s two largest producers, was expected to offer to freeze production at current levels instead of reducing it. Saudi Arabia pulled out of the talks due to disagreements over sharing supply cuts, and the Monday talks collapsed before they even started.

An OPEC official said Friday that Saudi Arabia wanted the cartel members to clear up their own differences before they sat down at the table with non-OPEC members, the Wall Street Journal reported.

Crude oil prices had recovered during the past week after Iran, an OPEC member reluctant to agree to production cuts, signaled its willingness to fall in line with the cartel’s plans.

“It is highly probable that oil and energy ministers of the member countries of Organization of Petroleum Exporting Countries will reach an agreement in the Nov. 30 meeting,” Iranian Oil Minister Bijan Zangeneh said Nov. 19 after meeting with OPEC’s secretary general in Tehran.

Iran and Iraq had disagreed with production cuts at OPEC’s previous meeting in Vienna a month ago, sending crude prices tumbling. The change of stance by Iran, which has been ramping up its production since the lifting of international sanctions earlier this year, was expected to boost the chances of a production cut being agreed to during the upcoming meeting Wednesday.

“The charade is coming to an end. They had to cancel the Monday meeting to avoid the embarrassment of it ending in failure. The market richly rewarded OPEC for rhetoric and now is poised to punish it harshly if they fail to come to an agreement,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, told Bloomberg.
• Oil Prices Fall Again As OPEC Can’t Agree On Production Cuts </s> OPEC, which for decades controlled global oil production, appeared to be losing its grip ahead of Wednesday’s scheduled meeting in Vienna to freeze or reduce output and prop up prices.

Some members of the Organization of Petroleum Exporting Countries have been trying to convince the rest to cut production to boost oil prices, which are half of what they were in 2014, currently hovering in the mid-$40 a barrel, the result of an oil glut.

Current price levels are good news for airlines, truckers and drivers but bad news for alternative energy startups, shale oil and gas operations, and economies dependent on oil prices to fund their budgets.

Any price increase, however, could come at the cost of market share as Asian buyers, who use a third of the world’s supply, look elsewhere, Reuters reported.

"For us, the current price levels look to be appropriate for both sides [buyers and producers]," said Eiichiro Kitahara, executive officer at Japanese refinery TonenGeneral Sekiyu.

"Our company aims to avoid depending highly on certain suppliers, and we may seek new [supply] opportunities."

Russia already has become China’s top oil supplier, displacing Saudi Arabia, Reuters said.

Algeria has been working hard to convince Iran, which is trying to make up for years of sanctions to cut its oil income, and Russia, a nonmember of the oil cartel invited to participate, to agree to a production deal, Bloomberg reported. Russia, however, isn’t even planning to attend Wednesday’s meeting.

“At current prices we won’t be able to survive two years [if prices don’t rise],” Algerian Energy Minister Noureddine Boutarfa told Bloomberg. “There are some billions in foreign reserves but they risk to melt like snow in eight to 10 months if the price of the barrel stays as it is.”

OPEC hasn’t been able to hold the line on production for years. Its last successful deal to cut production was eight years ago. The target Wednesday is to cut output by 1.2 million barrels a day from October levels, to bring production down to 32.5 million to 33 million barrels a day.

The oil ministers could impose production quotas on each member nation and cut deals for exemptions to keep participants happy enough to sign on. They also could fail to reach any deal, sending oil prices plummeting to less than $40 a barrel, or just postpone a decision.

Iranian Oil Minister Bijan Namdar said Tuesday his country isn’t willing to cut production while Saudi Arabia, which currently is producing a record 10.6 million barrels a day, has indicated it won’t agree to cuts unless all OPEC members, except Libya and Nigeria, cooperate, Bloomberg reported. Venezuela, where the economic situation has reached catastrophic proportions, and Iraq, which is battling the Islamic State group, also have asked for special consideration.

Platts reported Russian President Vladimir Putin and Iranian President Hassan Rouhani agreed to coordinate with each other. Putin said last month he would like to see production levels frozen rather than cut. Saudi Arabia has been slow to come to the idea of a production cut, given its vast cash reserves. The position has created pressure on other producers without the wherewithal to ride out low prices. The nationalism and anti-colonial sentiments that led to OPEC’s birth in the 1960s have waned, and the cartel has been unable to mount a successful campaign since the 1970s, Oilprice.com noted. "What I hear is kind of crazy. The fear in town is it's Doha redux. Everybody's worst nightmare," Helima Croft, head of global commodities strategy at RBC, told CNBC, referring to the meeting in Doha, Qatar, in April that failed to produce a freeze agreement when Saudi Arabia and Iran started feuding. "Once again, it seems [Saudi Deputy Crown Prince Mohammed bin Salman] has decided Iranian participation in a cut is mandated. If he sticks to that position, it doesn't lift off [Wednesday]. I think a cut was never on the table for Iran. Is this just a hard-line tactic? Are they trying to get the maximum concession?" Croft said. Iran reportedly is demanding Saudi production be cut back to 9.5 million barrels a day, but the Saudis are balking. Reaching a deal may not be the answer, however. "If prices are pushed up towards $60 we will see within nine months a strong response from U.S. shale production putting oil in the market," Fatih Birol, executive director of the International Energy Agency, told Reuters. </s> Persons stand in front of the headquarters of the Organization of the Petroleum Exporting Countries, OPEC, in Vienna, Austria, Saturday, Dec. 10, 2016. OPEC member states are meeting with Russia and other non-OPEC countries in Vienna for talks about a reduction in oil production. Secretary General Mohammed Barkindo said the discussions began Saturday in a "positive atmosphere" at the headquarters of the oil producers' cartel. (AP Photo/Ronald Zak) </s> Saudi Arabia signalled it’s ready to cut oil production more than expected, in a surprise announcement made minutes after Russia and several other non-OPEC countries pledged to curb output next year.

Taken together, the Organization of Petroleum Exporting Countries’s first deal with its rivals since 2001 and the Saudi comments represent a forceful effort by producers to wrest back control of the global oil market, depressed by persistent oversupply and record inventories.

“This is shock and awe by Saudi Arabia,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London. “It shows the commitment of Riyadh to rebalance the market and should end concerns about OPEC delivering the deal.”

Oil prices have surged more than 15 per cent since OPEC announced Nov. 30 it will cut production for the first time in eight years, rising this week briefly above $55 (U.S.). The price rise has propelled the shares of energy groups from Exxon Mobil Corp. to shale firms such as Continental Resources Inc.

Riyadh agreed with OPEC on Nov. 30 to cut its production to 10.06 million barrels a day, down from a record high of nearly 10.7 million barrels in July.

“I can tell you with absolute certainty that effective Jan. 1, we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30,” Saudi Oil Minister Khalid al-Falih said after Sunday’s meeting.

The Saudi minister said he was ready to cut below the psychologically significant level of 10 millions b/d – a level it has sustained since March, 2015 – depending on market conditions.

Mr. Al-Falih made his announcement after non-OPEC countries agreed to reduce production by 558,000 barrels a day, suggesting he had been waiting for the deal before committing to further cuts. The non-OPEC reduction is equal to the anticipated demand growth next year in China and India, according to data from the International Energy Agency.

The OPEC and non-OPEC pact encompasses countries that pump 60 per cent of the world’s oil, but excludes major producers such as the United States, China, Canada, Norway and Brazil.

“The deal speaks volumes about the Saudi commitment to rebalance the market,” said Yasser Elguindi, a veteran OPEC watcher with consultant Medley Global Advisors. “No one is talking any more about $30-a-barrel oil.”

Saudi Arabia has long insisted that any reductions from the group should be accompanied by action from other suppliers. OPEC two weeks ago agreed to reduce its own production by 1.2 million b/d. Mr. Al-Falih and his Russian counterpart, Alexander Novak, revealed they have been working for nearly a year on the agreement, meeting multiple times in secret.

“This is truly a historic event,” Mr. Novak said. “It’s the first time so many oil countries from different parts of the world gathered in one room to accomplish what we have done,” he added, speaking alongside Mr. Al-Falih.

Russia pledged to cut output by 300,000 barrels a day next year, down from a 30-year high last month of 11.2 million barrels a day. Mexico agreed to cut 100,000 barrels, Azerbaijan by 35,000 barrels and Oman by 40,000 barrels.

Mexico’s contributions would be made through “managed natural decline,” delegates said, meaning it won’t cut output deliberately and rather let production fall as its aging fields yield less. Other countries such as Azerbaijan will probably follow the same route. The use of natural decline as part of the non-OPEC deal is likely to dampen its impact.

Still, in a surprise move, Kazakhstan pledged a 20,000-b/d cut after coming under strong diplomatic pressure. The Kazakh cut is particularly important because the Asian country’s output is rising after a giant oil field started pumping in October.

The chain of announcements signal that Saudi Arabia is trying to push oil prices above $60 a barrel – and perhaps closer to $70 a barrel – as it attempts to fill a fiscal hole and prepares a partial flotation of its crown jewel, state-owned oil company Saudi Aramco, in 2018. The move toward higher prices may backfire, however, as it risks the resurgence of U.S. shale drilling from Texas to North Dakota.

“Emotionally, the market will likely rally,” said Adam Ritchie, founder of AR Oil Consulting. “But beyond rebalancing supply and demand, we have excess inventory that is astronomic that will continue to keep a lid on prices.”

The focus of the market will turn now to compliance, as historically OPEC and non-OPEC countries have cut far less than promised. In late 2001, for example, Moscow promised to reduce output, but actually it increased it the following year.

“The oil-price crash impelled terrified producers into collective supply restraint agreements,” said Bob McNally, founder of consultant Rapidan Group in Washington and a former White House oil official. “Occasionally, these loose, ad-hoc producer agreements enjoyed temporary success, but all eventually failed due to cheating.”
Non-Organization of Petroleum Exporting Countries agree to cut oil output which will help increase the price of petroleum products in the world market.