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OPEC pledges to cut more (chuckle).

OPEC and its allies, unhappy with the price of crude oil, have decided to cut output still further in hopes that will boost the price.

Iran, Libya and Venezuela, where production is a shadow of what it used to be, just watched from the sidelines as they are not being asked to make any cuts.

Saudi Arabia, which for decades said it would never again pick up for countries that ignore their quotas, announced it would cut output by 400,000 barrels a day beyond its new quota, thus picking up for countries that aren't doing their share.

Russia accepted the second biggest cuts after Saudi Arabia, but market watchers say Russia was reducing its output in recent months by less than what it pledged previously, so there were many questions about whether it would meet its new pledge of new cuts.

Two years ago, 10 of OPEC's 13 members, joined by 10 other countries led by Russia, decided to cut output collectively by 1.2 million barrels day. However, Russia, Iraq, Nigeria and Kazakhstan are widely reported to be ignoring their quotas. And prices remain sluggish.

So, on December 6, they agreed to cut another 503,000 barrels per day, effective January 1. Four countries will officially take two-thirds of added cuts--Saudi Arabia 33%, Russia 14%, Kuwait 11% and Iraq 10%.

However, while OPEC published a list showing how much each country would reduce output, it didn't say from what base it would make the cuts and it did not publish any list of current quotas. That makes it a little hard for anyone to judge who is complying and whose is not.

The numbers, in other words, are just floating in the ether. The market essentially ignored what OPEC said.

The market is paying more attention to the fact that US shale oil output is still rising while output from such producers as Brazil and Norway, which aren't part of the OPEC deal, are also expected to rise in 2020.

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Title Annotation:Economy: Money and its impact
Publication:Iran Times International (Washington, DC)
Geographic Code:7SAUD
Date:Dec 20, 2019
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