OPEC’s oil surprise could rattle the global economy

The Saudis pledged to cut their output by 500,000 barrels a day, with Kuwait, the United Arab Emirates, Algeria, Iraq, Kazakhstan and Oman also promising to reduce their production. As was the case in October, many of them are already producing at levels below their OPEC-agreed quotas and won’t actually have to cut production to meet their new targets.

The other country that joined that group was Russia, which said it would extend the 500,000 barrels a day supply reduction it announced in February. That reduction was supposed to run from March to June but will now be extended through to the end of the year.

When Russia announced that cut in early February it was supposed to be in retaliation for the Western sanctions on its oil, which force anyone shipping Russian oil on vessels that are insured by the European and US companies who dominate the sector, to observe a G-7 cap of $US60 a barrel on Russian…

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