OPEC cuts 1 million barrels in 1st reduction since 2004

OPEC will take one million barrels of oil a day off oversupplied world markets as soon as possible with its first output cut in more than two years, a senior OPEC delegate said, sending oil prices up nearly $1.50. The world's biggest oil exporter Saudi Arabia will shoulder most of the burden, the delegate said, as OPEC moves to address a 25% drop in prices since mid-July. The reduction amounts to just over 3% of the organization's total output. This will be OPEC's first output cut since April 2004.

U.S. oil rallied on the news, hitting $60.85 a barrel, up nearly $1.44, at one point. Analysts have expected this move for some time, especially after Nigeria and Venezuela announced they were making unilateral cuts. Kuwait added to the impetus on by stating its readiness to join in the reductions if necessary.

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