VI­EN­NA–Break­ing with years of in­ac­tion, OPEC agreed yes­ter­day to cut its oil out­put for the first time since 2008.

The move ef­fec­tive­ly scraps its strat­e­gy of squeez­ing US com­pe­ti­tion through high sup­ply that had back­fired by low­er­ing prices and drain­ing the car­tel's own economies.

The re­duc­tion of 1.2 mil­lion bar­rels a day is sig­nif­i­cant, leav­ing OPEC's dai­ly out­put at 32.5 mil­lion bar­rels. And OPEC Pres­i­dent Mo­hammed Bin Saleh Al-Sa­da said non-OPEC na­tions are ex­pect­ed to pare an ad­di­tion­al 600,000 bar­rels a day off their pro­duc­tion.

The com­bined cut will re­sult, at least in the short term, in some­what more pricey oil – and, by ex­ten­sion, car fu­el, heat­ing and elec­tric­i­ty. The in­ter­na­tion­al bench­mark for crude jumped 8.3 per cent, or US$3.86, to US$50.24 yes­ter­day.

In the longer term, how­ev­er, an­a­lysts say it's high­ly un­like­ly that oil will re­turn to the highs of around US$100 a bar­rel last seen two years ago. That's part­ly due to the fact that Pres­i­dent-elect Don­ald Trump has promised to free up more oil drilling in the US, which would in­crease glob­al sup­ply. De­mand is al­so not re­cov­er­ing as the world econ­o­my sags.

Play­ing trib­ute to "a his­toric mo­ment," Al-Sa­da said Wednes­day's move "will def­i­nite­ly bal­ance the mar­ket and help (in) re­duc­ing the stock over­hang."

Al-Sa­da said the OPEC cut­back is to take ef­fect Jan­u­ary 1, with con­sul­ta­tions planned on the ex­act tim­ing of the non-OPEC re­duc­tions. Rus­sia alone is com­mit­ted to tak­ing 300,000 bar­rels a day off the mar­ket.

With the pro­duc­tion cut, OPEC will not on­ly ben­e­fit from gain­ing more dol­lars per bar­rel. It can al­so lay claim once again to play­ing a part in in­flu­enc­ing world prices.

And its ten­ta­tive al­liance with Rus­sia and oth­er non-OPEC na­tions may give it – and them – ad­di­tion­al clout in fu­ture com­pe­ti­tion for mar­ket share with US pro­duc­ers, which are sure to re­turn in in­creas­ing num­bers if crude prices move up­ward.

Yes­ter­day's de­ci­sion was a de­par­ture from years of in­fight­ing among mem­bers re­fus­ing to give up their mar­ket share and a re­sult­ing se­ries of in­con­clu­sive meet­ings.

In an­oth­er re­flec­tion of new-found dis­ci­pline with­in the car­tel, Al-Sa­da said In­done­sia's mem­ber­ship had been sus­pend­ed af­ter it re­fused to ac­cept its share of pro­posed out­put cuts, re­duc­ing the num­ber of OPEC coun­tries to 13.

Part of the fo­cus fol­low­ing yes­ter­day's de­ci­sion is how well it holds. OPEC gave up as­sign­ing quo­tas in part be­cause mem­bers have ig­nored them in their quest for petrodol­lars.

But of­fi­cials were dis­play­ing new con­fi­dence. In com­ments ad­dressed to nay-say­ers about his or­gan­i­sa­tion's rel­e­vance, Al-Sa­da said its de­ci­sion "means the weight of OPEC and the re­silien­cy of OPEC is still there and it will con­tin­ue to be there."

"To­day's uni­ty is a very ex­plic­it sign about the po­si­tion of OPEC," he added.

Meet­ings to turn the planned non-OPEC cuts in­to re­al­i­ty are planned next month in Do­ha. From Moscow, Russ­ian En­er­gy Min­is­ter Alexan­der No­vak con­firmed his coun­try's readi­ness to pare 300,000 bar­rels from its out­put, adding that it would hap­pen grad­u­al­ly "with­in a short pe­ri­od of time based on tech­ni­cal ca­pac­i­ty."

Al-Sa­da said the OPEC cut­backs are in ef­fect for six months with the op­tion of re­new­al af­ter a re­view by a five-na­tion com­mit­tee set up to mon­i­tor com­pli­ance.

Still, an­a­lysts sug­gest­ed price up­swings would be rel­a­tive­ly mod­er­ate – and the fall­out min­i­mal, at least for the Unit­ed States. Sal Guatieri, se­nior econ­o­mist at BMO Cap­i­tal Mar­kets, said oil should rise to an av­er­age US$53 a bar­rel next year.

For the US econ­o­my, that's "a sweet spot... a high-enough price to spur in­vest­ment in the en­er­gy in­dus­try but not enough to se­ri­ous­ly drain pur­chas­ing pow­er" of con­sumers, he said.

"The losers are Eu­rope and Japan – oil-im­port­ing re­gions of the world" with bare­ly grow­ing ecomonies, said Guatieri.

One of the biggest hur­dles to yes­ter­day's deal had been a ri­val­ry be­tween Sau­di Ara­bia and Iran, whose strug­gle for dom­i­nance in the Mideast is al­so play­ing out in the Or­ga­ni­za­tion of the Pe­tro­le­um Ex­port­ing Coun­tries.

The Saud­is had long been hes­i­tant to shoul­der the li­on's share of a cut, while Iran had re­sist­ed re­duc­ing its own pro­duc­tion. It ar­gued that it has yet to re­cov­er its out­put lev­els hit by years of sanc­tions and that the onus was on the desert king­dom to pare back the most.

Re­flect­ing their com­pro­mise, doc­u­ments from the meet­ing showed the Saud­is com­mit­ted to chop­ping 486,000 bar­rels off the 10.544 mil­lion bar­rels they were pump­ing as of Oc­to­ber. Iran's quo­ta was set at 3.797 mil­lion bar­rels a day, down 90,000 bar­rels from Oc­to­ber.

All oth­er mem­bers cut as well, rang­ing from tiny Gabon's 9,000 bar­rel re­duc­tion to an Iraqi drop of a dai­ly 210,000 bar­rels. Non-mem­ber Rus­sia was pro­duc­ing over 11 mil­lion bar­rels a day in Oc­to­ber. (AP)