(Ecofin Agency) - In a new development, the members of the Organization of Petroleum Exporting Countries (OPEC) in Vienna, for the first time in eight years, agreed on a concerted production freeze at 32.5 million barrels per day in order to fast track the markets rebalancing and increase producers’ reserves.

The agreement represents about 1.2 million b/d cut from the group's current output levels, and is subject to major non-OPEC producers also agreeing to cut 600,000 b/d.

Moreover, Russia which has been on all fronts in the preliminary efforts to achieve this result has decided to reduce its output by 300,000 barrels on a daily basis.

“A fair price will benefit all. It will definitely move the economy to a healthier situation,” Mohammed al-Sada, Qatar’s oil minister, said.

Saudi Arabia has agreed to cut its production by 486,000 b/d from its October levels to 10.046 million b/d. Iraq, which had demanded for an exemption, agreed to cut production by 209,000 b/d from its October levels to 4.351 million b/d. Iran, on the other hand, will be permitted to produce 3.797 million b/d, a rise from its October production level of 3.69 million b/d. The country for a long time has insisted on recovering its pre-sanctions output level of some 4 million b/d before joining any pact to cut output.

According to the managing director of analysis for S&P Global Platts Bentek, Tony Starkey, the cuts match OPEC's forecast earlier this month that the world would be oversupplied by close to 1.8 million b/d in H1 of 2017, if the group's production stayed at current levels.

However, Libya and Nigeria have been exempt from freezing productions.

Anita Fatunji