by Xinhua Writer Zhang Xu
CAIRO, Sept. 29 (Xinhua) -- The first output cut deal in eight years, agreed by the Organization of Petroleum Exporting Countries (OPEC) in Algiers on Wednesday, has buoyed oil and stock markets around the world, but harder work lies ahead.
The agreement to slash output from the current 33.24 million barrels a day (bpd) to between 32.5 million and 33 million bpd marked a promising step by major oil producing countries to carve a way out of the oil swamp.
News of the OPEC agreement sent oil and stock prices surging on global markets.
Oil futures for November delivery traded on the New York Mercantile Exchange rose 2.38 dollars to 47.05 dollars on Wednesday. Total volume jumped 50 percent over the previous 100-day average.
European stocks extended rebounds for the third trading day, and shares in emerging economies like Russia, South Africa, and the Philippines also saw remarkable gains.
The deal, hailed as "historical" by OPEC President Mohammed Bin Saleh Al-Sada, came after six long hours of bargaining among the oil barons attending the cartel's informal meeting on the sidelines of an international energy forum in the Algerian capital.
It was also a victory for Algeria, which has been pushing very hard for an agreement. Al-Sada thanked the host for offering "such an opportunity to gather and decide on a crucial issue."
Earlier on Wednesday, reports suggested that Algeria had proposed that Saudi Arabia cap its supply at around 10.3 million bpd, and Iran, 3.7 million bpd, but the two major oil producers had reportedly appeared reluctant.
Before the informal meeting, Saudi Energy Minister Khalid al-Fatih said his country would be committed to supporting any agreement among OPEC members, but avoided answering whether he would accept a freeze or reduction in oil output.
His Iranian counterpart, Oil Minister Bijan Namdar Zanganeh, also said Tehran did not favor a formal OPEC decision in Algeria to freeze output, but would prefer a final agreement in November when the cartel convenes a formal session in Vienna.
At the end of the day, the Algerians' efforts paid off, and their energy minister's optimism prevailed.
"I'm very optimistic that OPEC members would reach a consensual agreement to restore stability to the up-and-down oil market," Noureddine Bouterfa had said on Sunday.
For now, the oil and stock markets have reacted positively to the Algiers deal, but much needs to be done in the coming months.
OPEC members have to negotiate over how much each country contributes to the cut in output. Participants at the Algiers gathering had agreed to set up a committee for the task, said al-Sada, the OPEC president.
Furthermore, the cartel has to prod non-OPEC producers such as Russia to share the burden of adjusting output.
The road ahead for rebalancing the oil market will likely be a long and tortuous one.
