- Specifics of new OPEC cuts will be worked out at November meeting
- Iran and Iraq have been expanding output rapidly while Saudi cuts are mostly seasonal
- Russian cooperation and possible renewal of shale oil output are key wild cards
For the first time since 2008, OPEC has announced a coordinated production cut of approximately 0.5 million barrels a day (Mb/d), limiting its total output to 32.5-33 Mb/d. The decision at an informal OPEC meeting in Algiers surprised the international community, because it broke with the organization’s relatively recent practice of not trimming output after crude prices collapsed in the summer of 2014.
Over the past two years, OPEC has focused on regaining market share; the forces of demand and supply were allowed to set prices. A preliminary attempt to change that course was tried in Doha in April 2016, but it failed – primarily due to disagreements between Iran and Saudi Arabia, which have each raised oil output by more than 1 Mb/d since late 2014.