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OPEC members sat down to reason together yesterday, and oil and the Loonie spiked higher as a result.

What happened, yo?

Well, here are 5 key takeaways that you need to know about from yesterday’s OPEC meeting.

1. Oil oversupply is still a problem

Dr. Mohammed Bin Saleh Al-Sada, Qatar’s Minister of Energy and the current OPEC president, gave a quick rundown of the oil market from OPEC’s perspective in his opening speech.

From the demand side of the equation, the OPEC president said that there are no major problems because demand “remains robust.” OPEC currently forecasts that demand will “expand by 1.2 million barrels a day this year,” unchanged from June’s forecast. Even better, demand is also expected to grow at “a similar level” in 2017.

That’s all and good. However, the OPEC president admitted that there is a problem from the supply side. In June, for example, OPEC projected that oil output from non-OPEC producers would fall by 740,000 barrels per day in 2016.

Unfortunately, that projection was revised to 600,000 barrels per day, since supply didn’t fall as quickly as anticipated. To make matters worse, oil output from non-OPEC producers is now anticipated to grow by 200,000 per day in 2017.

Originally, oil output from non-OPEC producers was expected to fall by 100,000 barrels per day back in June.

Given the lingering oversupply problem, OPEC had to accept that its projections for a rebalancing of the oil market “by the end of this year or in the first half of 2017” have now shifted further towards the future. As such, “there is now a greater degree of urgency about ensuring the market returns to balance as quickly as possible.”

2. OPEC plans to cut production

Reuters spilled the beans when it released a report based on statements by unnamed officials that OPEC members supposedly reached a deal to cut oil production.

USD/CAD: 1-Hour Forex Chart
USD/CAD: 1-Hour Forex Chart

Those rumors were later revealed to be true when OPEC acknowledged in an official press statement that there was indeed a problem in the oil market and that it originated “mainly from the supply side.” OPEC would therefore do its part by opting for a “production target ranging between 32.5 and 33.0 mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward.”

Awesome! It’s even more awesome because this is the first deal since 2008. And to put this in perspective, OPEC oil output in August was 33.237 million barrels per day, according to OPEC’s latest monthly oil report.

A production target ranging between 32.5 and 33.0 million barrels per pay would therefore effectively mean a production cut of about 237,000 to 737,000 barrels per day compared to its August output levels.

OPEC: August Oil Production Numbers

3. Production cut not yet implemented

It has to be stressed here that OPEC’s proposed production cut has not yet been implemented. Again, there’s no oil output cut yet. Everything is still in the planning phase.

OPEC will first have to “establish a High-Level Committee comprising representatives of Member Countries, supported by the OPEC Secretariat, to study and recommend the implementation of the production level of the Member Countries.”

In short, OPEC members will have to first agree among themselves on who will have to bite the bullet and reduce oil output. A final proposal would be presented and decided upon during OPEC’s November 30 meeting, which is still two months away. And of course, there’s really nothing to stop OPEC members from pushing out as many barrels of oil as they can during all that time.

4. Some OPEC members may be exempted

Iran has been adamantly defiant in its refusal to join any oil deal until and unless it reaches an oil output level of 4 million barrels per day.

Meanwhile, Nigeria has been begging for an exemption since it “lost literally between 500,000 and 700, 000 barrels per day on average” in the last 11-12 months due to disruptive activities by the Niger Delta Avengers, according to the Nigerian Minister of State Dr. Ibe Kachikwu.

Libya, for its part, has also been resisting any oil deal because it’s still in the process of resurrecting its oil industry after years of conflict in the post-Gaddafi era.

It was not explicitly stated what concessions were given to these OPEC members, but Saudi Arabia did seem to grant them an exemption when Khalid Al-Falih, the Saudi Oil Minister, said that Iran, Nigeria, and Libya would be allowed to “produce at the maximum levels that makes sense.”

5. Non-OPEC invited to cooperate

Aside from plans to cut production, OPEC also plans to “develop a framework of high-level consultations between OPEC and non-OPEC oil-producing countries, including identifying risks and taking pro-active measures that would ensure a balanced oil market on a sustainable basis.”

In simpler terms, OPEC plans to ask non-OPEC members to cooperate in its plan to cut oil output.

Russia would probably be at the top of the list, since Russian oil production apparently reached levels not seen since the 1980’s Soviet era, coming in at a whopping 11.1 million barrels per day as of this month, up by 400,000 barrels a day compared to August.

Russian Oil Production

However, there is still some hope because Russian Oil Minister Alexander Novak would be meeting again with Saudi Arabia in October. Also, Novak promised that “we [Russia] can confirm that we can make our contribution to see a quick rebalancing of the market.”

Novak made it clear that Russia prefers capping its oil output at current (very high) levels and that Russia won’t join a deal until and unless OPEC members hammer out a deal among themselves first.