Saudi Arabia and Russia have agreed to freeze oil output to tackle the global glut in the sector.
In a meeting in Qatar, the countries’ oil ministers agreed to freeze production at January levels in order to help crude prices pick up following a 12-year low.
Russia pumped a post-Soviet record of 10.88 million barrels per day (mb/d) in last month and Saudi Arabia’s production accounted for around 10.2mb/d during the same period.
Saudi Arabia’s Oil Minister Ali al-Naimi told reporters “it is an adequate measure” and added Venezuela and Qatar are included in the deal.
Oil prices pushed up yesterday and this morning as a deal was expected in Qatar today.
Brent oil is currently trading at $35.3/bbl (24.04/bbl).
Sebastien Marlier, Senior Commodities Editor at The Economist Intelligence Unit believes the probabilities of other OPEC countries such as Iran or Iraq to join the deal “remains very low”.
He added: “Even if the deal is implemented and respected, oil markets will remain oversupplied. Global production far exceeded consumption in January, demand growth is slowing and if anything, the deal could provide a new lifeline to higher-cost producers, including US shale firms.”