The Organization of the Petroleum Exporting Countries’ (Opec) decision to cut oil production, for the first time in eight years, marks a landmark deal.
The oil cartel has endured two years of a supply glut that reduced oil prices dramatically, depleted national revenues and upended the global economy. Now, its notoriously fractious members have finally agreed to drain the inventory. The deal required compromises by all major players: Saudi Arabia, which had earlier led the charge on ramping up production to squeeze out US shale gas producers, took the big hit; while post sanctions-Iran, which was unwilling to cut back production as it sought to regain market share, also agreed to fall in line. War-torn Iraq has been given a quota, though distressed Libya and Nigeria have been exempted.
The deal is broader than expected, especially with non-member Russia also agreeing to a cut. But much will depend on how the deal is implemented. Members have cheated in the past, and it’s unclear how compliance will be ensured.