Opec and non-members reach deal on output cut

Again, a rise in prices due to the supply cut will invariably help the United States shale or tight oil producers who will be encouraged to ramp up production, which in turn will drive crude prices lower.

Those non-member cuts come on top of an OPEC decision November 30 to reduce member output by 1.2 million barrels a day.

Still, it's unclear whether the historic deal will suffice to drain the oil stockpiles that have accumulated.

The 558,000 barrels per day cut was lower than the target of 600,000 that the cartel had envisioned for non-OPEC countries.

Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time. The group would consist of three OPEC members and two non-OPEC countries, Novak said.

The agreement between OPEC and non-OPEC producers is their first deal since 2001 to reduce oil output together.

Russian energy minister Alexander Novak said the meeting was "a unique window of opportunity for oil producers to help the market find an equilibrium".

Saudi Arabia is informing its customers of cuts to their January crude oil supplies to comply with the latest OPEC agreement, according to a PIRA note late on Thursday.

Even in the latest round of cuts, it's not yet clear how much will be Iran's share.

Among the non-Opec countries attending the meeting were Azerbaijan, Oman, Mexico, Malaysia, Sudan, South Sudan and Bahrain.

Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as USA shale firms out of the market. Their joint reduction of around 1.8 million bpd would account for about 2 percent of global oil supply.

On Friday, Saudi Arabia told its us and European customers it would reduce oil deliveries from January, signalling it had already started implementing cuts.

"We expect the meeting between Opec and non-Opec producers to result in a credible document, which we think will be supportive for prices", said Bjarne Schieldrop, chief commodities analyst at top Nordic corporate bank SEB.