Sunday, December 04, 2016
What in the world is going on with oil prices
right now?
That’s what many industry analysts are asking in light of a deal that was struck by OPEC recently.
According to the terms of that deal, OPEC members have decided to cut the production of oil back by 1.2 million barrels per day, with The Economist reporting that that will amount to a 2 percent reduction in the total amount of oil produced worldwide every day. Countries like Saudi Arabia, Iraq and Kuwait are expected to scale back their oil production the most dramatically.
In the short term, this has caused the price of oil to rise quickly. Brent crude oil rose from $46 per barrel to almost $54 per barrel in the wake of the OPEC announcement. Bloomberg notes that some prognosticators now believe that oil prices in the U.S. could increase in the coming years, as well, due to the expected reduction in international oil availability, which could be very beneficial to U.S. drillers.
However, as Vox points out, there’s no guarantee that the OPEC deal will result in higher oil prices in the long run. The deal is contingent on non-OPEC countries like Russia agreeing to follow suit and cut production. There’s also a chance that many U.S.-based companies who have shut down their operations in places like North Dakota and Texas due to low oil prices could get back into the game in the coming months and stabilize the market. There is a lot of uncertainty at the moment with all eyes on how the OPEC deal will ultimately affect the global production of oil.
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TAGGED AS:
- OPEC
- us oil production