FX.co ★ Saudis agree to extra cuts as Russia and Kazakhstan seek higher oil output

Russia and Saudi Arabia have finally reached a compromise on oil production. The world's largest oil producers have agreed to maintain oil output at the current levels in January and February. They will start ramping up production in spring. The negotiations were tense as it was difficult to come to an agreement that would satisfy everyone. The participants were protecting their interests which is why the approval process was delayed. The parties were choosing between two possible scenarios: they could increase oil production by half a million barrels per day in February or they could keep the output at the current January levels to discuss the easing of output cuts later in March. Moscow insisted on lifting production curbs, while other members called for maintaining the existing supply volumes. Finally, the second option was approved as it turned out to be acceptable for everyone. So, crude output will remain unchanged until spring with some minor changes regarding quota distribution. Thus, Russia and Kazakhstan will be able to boost production in February and March at the expense of Saudi Arabia. This means that Riyadh will reduce its oil supply by 75,000 barrels per day which will allow Russia and Kazakhstan to extend their production by 65,000 and 10,000 barrels per day respectively.