Producers need to cut about 1 million barrels a day from October production levels, Saudi Energy Minister Khalid Al-Falih said in Abu Dhabi on Monday. Russia, the world's second-biggest producer, said it would commit to any new agreement among producers to cut output.
"We're kind of back to square one: It must feel like November 2016 to them, a lot", said John Kilduff, a partner at Again Capital Management in NY, referring to the time period when OPEC and its allies agreed to initiate production cuts.
"Hopefully, Saudi Arabia and OPEC will not be cutting oil production. oil prices should be much lower based on supply!" Energy ministers from Oman, Kuwait and Algeria were among others who attended the one-day meeting.
This may be the beginning of a stabilisation in the oil market after crude prices crashed by about 20% since early October. "We have to wait and see how the market is unfolding".
"One thing that is abundantly clear, OPEC is in for a shale shocker as U.S. crude production increased to a record 11.6 million barrels per day and will cross the 12 million threshold next year", Stephen Innes of financial services company Oanda said.
"A new strategy needs to be formed, whether it's cuts or something else, it's not increasing production definitely". This comes as the United States imposed sanctions on Iran are directly impacting the global oil market, creating an outcome that many countries did not foresee.
"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the U.S., more than compensating for lost Iranian barrels", Forex.com analyst Fawad Razaqzada told AFP before the meeting.
But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.
Oil prices rise 1.5% after Saudi Arabia announces supply cut in December
He also attributed the sharp drop in prices to "microeconomic uncertainties" and signs of a build-up in crude inventories. The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market.
The JMMC, a technical committee, is expected to make important recommendations on production cuts to a key ministerial meeting in Vienna next month for the OPEC and non-OPEC producers.
As a result, the state's rising production could further dampen oil prices, while also spurring the ongoing development of oil-shipping infrastructure, eventually weighing on energy prices across the US.
Since then, OPEC production has risen 820,000 bpd since May, according to the latest S&P Global Platts OPEC survey.
"There is no consensus yet among oil producers about cutting production", Falih said.
When asked about the possibility of an output cut, he insisted it was "premature to talk about a specific action".
"We have to study all the factors", he said.
Decision comes amid fears of oversupply. A drop off in crude oil prices in the recent period has weighed on oil and gas companies.
Major emerging economies like India, Indonesia and Turkey came under strong pressure earlier this year as their currencies slumped against the dollar just as oil prices surged, eroding demand.