OPEC faces steep challenge to reach oil cut deal

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Although OPEC had struggled to reach an agreement because Saudi Arabia reportedly had refused to agree to an exemption for Iran, the deal was reached with Russian Federation agreeing to cut output by 200,000 barrels per day while Moscow agreed on a specific reduction.

Officials said Opec would reduce output by 800,000 barrels per day, based on October's production levels.

An OPEC press official told reporters negotiations will continue Friday between the 15-member organization and non-OPEC oil producing allies, which include Russian Federation and nine countries, to discuss how much they can contribute to supply cuts.

Oil prices jumped about 5 per cent to more than US$63 a barrel as the combined cut of 1.2 million bpd was larger than the minimum 1 million bpd that the market had expected.

Brent crude LCOc1 rose $1.64, or 2.9 percent, to $61.70 a barrel by 1:46 p.m. EDT (1746 GMT).

The kingdom is also under pressure by the U.S. President Donald Trump who does not want OPEC to cut production and prefers low oil prices for American consumers.

OPEC Kingpin Saudi Arabia, meanwhile, has to bear in mind pressure from the United States after President Donald Trump demanded in a tweet on Wednesday that the cartel boost output so as to lower prices and help the economy. Saudi Oil Minister Khalid al-Falih said he hoped the group could reach a deal by Friday.

A major sticking point had proved to be a demand by sanctions-hit Iran that it be exempt from some of the reduction restrictions, though Tehran later indicated it was happy with the outcome. Higher price levels are needed to keep oil flowing and re-establish a spare production capacity in the market capable of coping with emergencies. "We need to see those highs scaled before we would be able to say this is the start of a sustained rally back to $70".

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Starting to see the consequences of his actions, in early November Trump announced a decision to grant waivers to eight countries to continue importing Iranian oil.

This shift went on display this week at OPEC's meeting in Vienna.

NOGUCHI: Oil prices were up about 4 percent on the news today.

Although the United States awarded last-minute sanctions waivers to major importers of Iranian oil, Iran began under-reporting its official export levels in mid-September, in an effort to evade sanctions.

- Crude exports have established an all-time weekly high of 3.2mbpd, climbing up some 0.6-0.7mbpd from the past weeks.

OPEC said its decision to cut followed reviews of various reports, including those of its Secretary-General, the Joint Ministerial Monitoring Committee (JMMC), the Joint Technical Committee (JTC), the OPEC Secretariat, and the Economic Commission Board.

Competition to Brent from US shale output has weighed on prices at a time when financial markets are anxious about the health of the global economy and the fallout of the US-China trade war.