The countries belonging to the international oil cartel known as OPEC agreed Wednesday to cut production for the first time since 2008, ending a global glut in supply and triggering a rise in the price of crude. Led by Saudi Arabia, OPEC's policies have cut in half the price of crude over the past two years.
The move follows an announcement made by Saudi Arabia last week in which it announced its willingness to soften its hardline approach if its bitter enemy, Iran, was willing to freeze its own output till the end of 2016
"OPEC made an exceptional decision today ... After two and a half years, OPEC reached consensus to manage the market," said Iranian Oil Minister Bijan Zanganeh, Reuters reports.
The Organization of the Petroleum Exporting Countries would reduce output to a range of 32.5-33.0 million barrels per day. OPEC estimates its current output at 33.24 million barrels per day, official sources said.
OPEC members like Venezuela and Ecuador pushed for the cut after seeing oil prices plummet from USD$110 a barrel to less than half that since 2014. However, both countries remain skeptical of the deal, saying they want to see the full term.
The move would effectively re-establish OPEC production ceilings abandoned a year ago. Saudi Arabia, which maintains huge influence in OPEC, is currently running into economic difficulties after it opted to flood the market and drive out its rivals.