Prior to the meeting, specialized media pointed out Riyadh was under pressure from US President Donald Trump, who called for stable oil flows and low prices. Saudi Arabia had previously said a 1 million barrel-a-day cut was the likely scenario.
"OPEC has committed to 800,000 [barrels per day] in output cuts, and 10 non-OPEC producers led by Russian Federation will slash another 400,000 b/d for six months beginning January, under a preliminary deal reached Friday after two days of tense negotiations". Although the cut is much higher than expected, that is why news of crude prices in the worldwide market has increased by 5.4 percent. Benchmark New York crude was $2.11, or 4.1 percent, higher at $53.60 a barrel.
The unprecedented agreement forged among Opec and the 11 non-Opec producers, was for a concerted effort to stabilize the global oil market through voluntary production cuts of about 1.8 million barrels per day. Russia's oil minister, Alexander Novak, has played a crucial role in the negotiations, Kallanish Energy reports.
On Wednesday night, ministers' faces were solemn when they left a meeting of the Joint Ministerial Committee, the body tasked with overseeing an "agreement of cooperation" between OPEC and a group of allies - together known as OPEC+ - and which is led by the Saudi and Russian energy ministers.
Oil output from the world's biggest producers - Opec, Russia and the USA - has increased by 3.3 million bpd since the end of 2017 to 56.38 million bpd, meeting nearly 60 percent of global consumption.
On the demand side, the trade dispute between USA and China threatens global economic growth and could lead to lower demand in 2019. Iran, OPEC's third-largest producer, has considerably reduced its oil exports so far.
"Yes", Zangeneh said before the OPEC-non-OPEC meeting, asked if Iran was exempt from the cuts under the deal.
A bipartisan group of USA senators has vowed to sanction Saudi Arabia after a briefing by CIA Director Gina Haspel convinced them the Saudi crown prince ordered the killing, which took place October 2 in the Saudi Consulate in Istanbul.
Petroleum exports until recently were dominated by products like gasoline and diesel, but that has changed since the US shale revolution that has sped up drilling and extraction of oil, helping boost overall USA production to a record 11.7 million bpd.
"What changed with the premier's announcement is now there's confidence that the market will be balanced with the cuts that are being made in the first quarter and the increase in crude-by-rail", said Jackie Forrest, research director for the ARC Energy Research Institute in Calgary.
On net, we believe OPEC's policy coming out of the December meeting should support oil prices in the low $60s for Brent crude and the mid-$50s for WTI. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.
However, the U.S. then granted temporary waivers to eight countries, including crucially China, to allow them to carry on importing Iranian oil, contributing to a plunge in oil prices which wiped out the gains seen since early 2017.
The Organization of the Petroleum Exporting Countries (OPEC) is among the world's most powerful cartels.
"We continue to expect that slower economic growth will weigh on oil demand next year, which coupled with rapid growth in USA production, will put renewed downward pressure on prices", said Caroline Bain, an economist at Capital Economics.