OPEC producers have tightened the screw on oil supplies in a pact with independent exporters that cuts world production by nearly two million barrels daily from January 1.
The cartel on Friday agreed to cut output by 1.5 million barrels a day, after winning pledges from five non-OPEC nations to shave 462,500 bpd. The curbs were imposed for six months although ministers are set to meet again in March to review policy.
Having ceded market share this year to its competitors, the Organisation of the Petroleum Exporting Countries now has recruited them as de facto cartel members, at least for a few months, to lift crude prices.
OPEC in November laid down the gauntlet to its non-OPEC rivals when it announced it would implement new restrictions to counter slack demand for its oil during an economic downturn only if other producers shared the burden of restraints.
Russia, Mexico, Norway, Oman and Angola at first resisted but amid fears of a price war benchmark Brent crude dipped below $17 and they cobbled together sufficient cuts to trigger OPEC's fourth round of constraints in a year.
Since then, confidence in a deal has grown and Brent in London today was trading 44 cents higher at $20.78 after gaining a dollar on Thursday. OPEC is aiming to lift prices back towards the bottom end of its preferred $22-$28 target range, equivalent to about $24-$30 for Brent.
It successfully defended that high price band for 18 months until the September 11 attacks signalled a further deterioration in the ailing world economy.
