Here’s What to Do If You Missed Out on Yesterday’s Huge Oil Rally
OPEC just made a historic deal.
As you probably know, OPEC, or the Organization of the Petroleum Exporting Countries, is a cartel of major oil-producing countries. Its members include Saudi Arabia, Iraq, and Iran. Together, the group supplies about 40% of the world’s oil.
For years, OPEC fixed how much oil it produced to keep prices high. It did what a cartel is supposed to do.
But last December, the organization abandoned its production ceiling for the first time since 1982.
It’s been every member for itself since then. In October, Saudi Arabia pumped a record amount of oil. Iraq and Iran have significantly ramped up output, too.
• In a way, pumping huge amounts of oil has been good for these countries…
They’ve had more barrels of oil to sell. And oil is the main export of OPEC member countries.
But at the same time, OPEC’s been flooding the global economy with oil. That’s a big reason why oil still trades for less than half of what it did two years ago.
That’s also why the cartel has been trying to cut back on production all year. But every time OPEC tries to put together a deal, the talks go nowhere… That is, until now.
• Yesterday, OPEC announced its first production cuts since 2008…
Bloomberg Markets was one of the first major outlets to break the story:
OPEC will reduce output by about 1.2 million barrels a day by January, the group said, fulfilling a plan sketched out in Algiers in September to cut its production to 32.5 million barrels. The agreement exempted Nigeria and Libya, but gave Iraq its first quotas since the 1990s.
OPEC also asked non-members like Russia, the world’s largest oil producer, to pump less oil. According to Bloomberg Markets, non-OPEC countries will cut production by about 600,000 barrels a day.