WORLD, December 02, 2016 (Bloomberg): Oil may climb to $60 a barrel for the first time in almost a year and a half after Russia and other unaffiliated nations joined an OPEC pledge to reduce production and Saudi Arabia surprised the market by saying it will cut more than previously agreed.
Non-OPEC nations said Saturday they will reduce output by 558,000 barrels a day, adding to a Nov. 30 OPEC commitment to cut 1.2 million starting in January. Brent crude has surged more than 20 percent since OPEC announced its first cut in eight years. Prices jumped as much as 6.6 percent to $57.89 a barrel in early Monday trading.
The agreement is the first between OPEC and non-OPEC producers since 2001. It underscores the resolve to end a market-share war that exacerbated a global oversupply and caused prices to slump by 75 percent. The OPEC and non-OPEC plan encompasses countries that pump 60 percent of the world’s oil but excludes producers such as the U.S. and Canada, which have benefited from the boom in shale output, as well as China, Norway and Brazil.
Russia had already announced it plans to trim output by 300,000 barrels a day next year, down from a 30-year high last month of 11.2 million barrels a day. At the meeting, Mexico pledged to cut 100,000 barrels, Azerbaijan by 35,000 barrels and Oman by 40,000 barrels, a delegate said.