World Oil production is just over 100 million barrels per day, so this is a 1.2% global cut.
Oil prices jumped about 5 per cent to more than US$63 a barrel as the combined cut of 1.2 million bpd was larger than the minimum 1 million bpd that the market had expected.
Saudi Arabia and other big oil producers, huddled in Vienna this week at their last big OPEC meeting of the year, are trying to walk a tightrope between fixing a glutted oil market that has hurt their own economies or keeping U.S. President Donald Trump happy.
U.S. Energy Information Administration data published yesterday show that the U.S. imported 8.84 million barrels per day of crude oil and petroleum products and exported 9.05 million barrels per day in the last week of November, amounting to a net export of 211,000 barrels per day.
Petroleum exports until recently were dominated by products like gasoline and diesel, but that has changed since the U.S. shale revolution that has sped up drilling and extraction of oil, helping boost overall USA production to a record 11.7 million bpd.
USA oil prices were little changed after the EIA data.
The Vienna meetings focused on how much production OPEC and Russian Federation would cut, and how the reductions would be shared among the wider group. Benchmark New York crude was $2.11, or 4.1 percent, higher at $53.60 a barrel.
"Now that we've seen this fundamental shift in the market, I would expect there to be good support down at these prices levels and lead those newly established shorts to start covering", said Ryan Fitzmaurice, an energy strategist at Rabobank.
The joint output reduction is seen as a deeper cut than expected, as the USA wants OPEC to keep a relatively lower oil price.
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OPEC countries, including Saudi Arabia and the UAE, will cut production by 800,000 barrels a day while non-OPEC countries will trim 400,000.
"We are becoming the dominant energy power in the world", said Michael Lynch, president of Strategic Energy & Economic Research. Shale oil production in the USA is the biggest contributor to the rising share of the non-OPEC block in global crude production.
Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, has faced demands from Mr. Trump to help the global economy by refraining from paring supplies.
"Low prices are actually not good for the US economy, " Al-Falih said, a riposte to Trump's repeated calls for OPEC to open the taps.
Saudi Energy Minister Khalid al-Falih said he was not confident a deal could be reached.
"The commitments made under this proactive collaboration between participating countries are to be voluntarily implemented, non-binding and would not in any way affect the rights of peoples and nations to permanent sovereignty over the exploitation and management of their natural resources", he said. For his part, Venezuela's oil minister, Manuel Quevedo, assured that his country will continue to defend oil prices and stability in the world market.
The proposed cut was in line with the 1 million to 1.3 million barrels per day expected by analysts.
Seaborne crude oil exports from OPEC countries, tracked daily by CargoMetrics, saw a relatively broad decline, with nine of the 15 OPEC member countries registering a week-on-week drop in oil tanker loadings.