Opec countries agree first oil output cut in eight years
Source: BBC
Opec countries agree first oil output cut in eight years
30 November 2016
From the section Business
The oil cartel Opec has agreed its first supply cut in eight years in order to boost the price of oil. Mohammed Bin Saleh Al-Sada, Opec's president, said a cut of 1.2 million barrels a day would start from January. It comes after more than two years of depressed oil prices, which have more than halved since 2014, due to a supply glut on the market.
The price of Brent crude jumped 10% to $51.94 a barrel, and US crude rose 9% to $49.53.
In addition to the production cut by Opec members, non-Opec countries will be expected to reduce production by 600,000 barrels a day, according to Mr Al-Sada. He did not list which countries these might be, beyond saying Russia was prepared to cut 300,000 barrels from its output of more than 10 million barrels a day. "This agreement comes from a sense of responsibility from Opec member countries and non-Opec member countries for the general well-being and health of the world economy," he said.
(snip)
The Saudis were hesitant to shoulder the lion's share of a cut, while Iran had resisted reducing its own production, arguing it had yet to recover its output levels after years of sanctions. At Wednesday's meeting, however, Saudi Arabia agreed to cut output by about 500,000 barrels per day - a total reduction of about 4.5%. That will take its output to 10.06 million barrels per day.
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Read more: http://www.bbc.com/news/business-38155185
JNelson6563
(28,151 posts)Achilleaze
(15,543 posts)greymattermom
(5,754 posts)would also like to see an increase in oil prices. Now Putin and OPEC can work together to trump Trump.
Vinca
(50,267 posts)Given the impending state of our country, it's within the realm of possibility.
0nirevets
(391 posts)High oil prices are never the result of actual supply and demand events, they are the result of deliberate price manipulation by collusion within the ranks of oil producers (corporate and national). Like all commodities sold in public markets, oil follows the law of supply and demand.
When OPEC (read Saudi Arabia) stopped playing the price manipulation game a few years ago, prices fell to closer to their true price, and we've all been paying close to $2/gal at the local pumps.
Now OPEC is cutting back, prices will "naturally" spike and find a new high plateau, probably around $4/gal (my prediction). What do you think US oil producers will do now? "Drill, Baby, Drill!" is their mantra, and always has been. OPEC cuts back, the US increases it's supply. Other oil producers around the world cut their production, the US goes in exactly the opposite direction using "supply and demand" as an excuse to price-gouge every living person who drives a car.
There are no new global oil customers to force an increase in DEMAND. This is the basis of amoral "Supply Side" voodoo. In actual fact oil consumption is in decline everywhere, and prices should naturally be tanking. We should be paying less than $1.50/gal.
Goodbye cheap gasoline for the foreseeable future. This is all a direct result of Trump's election, but that's another post for another time.
S