Nov 30, 2016 10:05 PM IST | Source: CNBC-TV18

OPEC agrees to cut output by almost 1.2 bpd: Sources

Abhishek Deshpande, oil market expert at Natixis says that a cut will be a positive news from the OPEC. A cut, if it actually comes, could also lead to non-OPEC countries cutting output.

The OPEC producers have agreed to cut output by around 1.2 barrels per day (bpd) in Algiers, according to a source-based news on Reuters. During its meeting in Algiers, OPEC members had proposed a production ceiling of 32.5 bpd in.

Abhishek Deshpande, oil market expert at Natixis says that a cut will be a positive news from the OPEC. A cut, if it actually comes, could also lead to non-OPEC countries cutting output.

Speaking to CNBC-TV18, Deshpande said that if any deal comes through, Iraq will be a part of it. Iran, however, is not likely to be a part of the expected deal.

If the output cut happens, some rise in oil prices is expected.

Sources further said that Indonesia has been suspended from OPEC and Saudi Arabia is likely to cut output to 10.06 m bpd. Iran production will be set at 3.797 m bps under the OPEC ceiling.

Indonesia’s output share will be distributed among the members, sources added.

Fadel Gheit, MD and Senior Analyst at Oppenheimer & Co said that Russia is unlikely to participate in large production cut. Implementation of a cut will difficult.

Gheit added that oil prices are already low and cannot sustain long at such lebels.

Chris Main, Commodities Strategy analyst at Citi believes that oil could head towards USD 40-45 range.

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