A Deal Has Been Reached With OPEC To Freeze Oil Output Finally!
Breaking news early Tuesday morning brings the good news everybody in the oil and gas industry has been waiting for. OPEC has finally cracked under pressure. We knew it was a matter of time. OPEC is ready to play ball.
In a sign of tentative cooperation among major oil producers, Qatar, Russia, Saudi Arabia and Venezuela announced a plan on Tuesday to freeze output at current levels, a move intended to help bolster energy prices. The deal is contingent on other producers joining in on the freeze.
The four countries combined produced an average of around 23.75 million barrels a day this January, which accounted for more than 25% of the total global output. Russia and Saudi Arabia, in particular, have been hitting production records and dueling atop the list of the world’s largest producers.
Russia produced a post-Soviet record of 10.989 million barrels a day in January, while Saudi Arabia produced 9.95 million barrels.
What the industry needs is a complete cut in production, but right now we will gladly settle for a freeze in production. The main objective is to stabilize the markets, after that happens the next step will be for the big players to figure out how to push oil prices back up.
The meeting was the first step in the right direction and now we will have to wait and see what is next. The market is still very volatile, and until all major producers jump in line and agree on a final plan, the markets will continue to bounce around. The good news is we shouldn’t see the bottom completely falling out on oil prices.
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