Iran’s president calls OPEC output cut ‘success’

“A weaker US dollar is typically supportive for commodity prices and may have helped steady crude oil from the lows in today’s trade”. The group’s deal to curb production by 1.2 million barrels a day was broader than expected, with Russian Federation nodding to unprecedented cuts.

Asian equities rallied the most in three weeks after OPEC reached the deal. It will take months to monitor whether OPEC members actually deliver their promise.

It’s the first time OPEC members have agreed on a production cut since 2008.

Libya and Nigeria are exempted from the deal following the disruption of the countries oil production facilities, while Indonesia’s membership was suspended due to the country status as a net oil importer. Saudi Arabia, the group’s biggest producer, will see its output decline by nearly 500,000 barrels a day.

Members of OPEC, which include Saudi Arabia, Iraq and Iran, reached a consensus on Wednesday which should go some way towards reducing a global oversupply of oil which has pushed prices down.

It said other key non-Opec producers, including Azerbaijan and Kazakhstan, also planned to reduce production to about 600,000 bpd.

Despite the rises, analysts noted that prices had only returned to levels seen in September and October – when plans for a cut were first announced – and raised doubts about the deal. “I think we are at a point where we have modestly been able to set a cap on a production but not excessively”, he told Bloomberg. During that time Iran’s rival Saudi Arabia significantly increased their output, although they have since offered to reduce their output by 0.5 million barrels per day.

The agreement is also an important victory for Iran. That’s a daily boost of 1 million barrels over its 2015 average. Both countries had seen their production drop because of of armed conflict. However, production rose by 11,000 bpd to 522,000 bpd during the same period in Alaska.

There are two main reasons the OPEC agreement has made investors optimistic about the price of crude oil.

Al-Sada as asked during a press conference to address whether OPEC was still a vital organization.

“The supply and demand is therefore not going to be as tight as OPEC portrays it, but it will still be a meaningful cut of supply that will accelerate the global rebalancing”, he said.