<article><p class="lead">Opec ministers have reached an agreement to cut their production by 1.2mn b/d to 32.5mn b/d, effective for six months from 1 January, 2017, said current Opec president and Qatari oil minister Mohammed al-Sada.</p><p>The deal will initially be for six months and will be monitored by a three country committee. Al-Sada said the next scheduled ministerial meeting will be on 25 May and the main intention of that meeting will be to roll over the new ceiling.</p><p>Indonesia, which is a net importer of crude, decided to suspend its membership of Opec rather than participate in the cuts. The reduction it would have made from its production of some 720,000 b/d will be redistributed between other members. </p><p>All new production allocations are based on October secondary source estimates except for Angola, which will cut from a September level because of maintenance work carried out in October.</p><p>Saudi Arabia will cut production by 486,000 b/d, which is proportionally no higher than the overall reduction. But Iran will be allowed to increase output by 90,000 b/d to not far short of its claimed pre-sanctions level of 4mn b/d. Iraq has agreed to cut by 210,000 b/d while Kuwait cuts by 131,000 b/d and the UAE by 139,000 b/d and Qatar by 30,000 b/d. Algeria cuts by 50,000 b/d and Gabon and Ecuador make small cuts. Venezuela cuts by 95,000 b/d. Libya and Nigeria are exempted because of their internal security situations. Angola cuts by 78,000 b/d.</p><p>The deal is contingent on non-Opec producer countries cutting by 600,000 b/d. Al-Sada said that Russia has pledged to reduce its output by 300,000 b/d. If confirmed that would mark a change in Russia's position as Moscow previously said it would only freeze from current record output of around 11mn b/d. The Opec president said he is confident the 600,000 b/d level of pledges will be met. Earlier, Russia's oil ministry declined to comment on remarks by some ministers that it had agreed to cut but said a statement would be issued.</p><p>Al-Sada said the agreement is based on proposals put forward by Algeria. He also said that the "special circumstances" of some countries had been taken into account. </p><p>A reduction of Opec production to 32.5mn b/d would take the group's output back to level seen in the first quarter of this year. In the wake of the deal, at 1627 GMT front month Brent crude was trading around 7.7pc up on the previous close at $49.98/bl.</p></article>
