Saudi Arabia, OPEC's de-facto leader, said today the group will slash a record 2 million barrels from its daily production as of January 1, while Russia and other countries said they would remove hundreds of thousands of additional barrels from the market.
Saudi oil minister Ali Naimi said there was an OPEC consensus ahead of a formal agreement later in the day for the cut.
An official decision to cut 2 million barrels from output all at once would be a first for the organization. OPEC had cut that amount from its output four years ago, but that was done in two stages.
Also significant would be formal support from Russia, Azerbaijan and other non-OPEC producers. Mexico, Norway and Russia slashed production in the late 1990s, at a time oil was selling for about $10 a barrel.
Russian Deputy Premier Igor Sechin and Azeri Energy Minister Natik Aliev said separately their countries would reduce output by a total of more than 600,000 barrels a day.
Still, the Russian and Azeiri commitments appeared to be at least partially symbolic, with the Russians indicating they had already decided on their cutback last month, and Azerbaijan's output had already been reduced by roughly a third due to production problems.
Saudi oil minister Ali Naimi first mentioned the 2 million figure in Oran on Tuesday, the eve of the oil ministers' decision making meeting. Today, he said the ministers were likely to agree "on a reduction of 2 million barrels per day from what we are doing today... A significant cut."
