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The meeting of OPEC on November 30, 2016 focused on production cuts from member states to combat the low oil prices.
This is the first agreed upon reduction by OPEC since 2008. By January 2017, OPEC expects a reduction of 1.2 million BOPD. Saudi Arabia will experience the greatest reduction at 500,000 BOPD. Additionally, the UAE and Kuwait are reducing output by 139,000 BOPD and 131,000 BOPD, respectively. Most notably, Russia expects to decrease production up to 300,000 BOPD. Russia, a non-OPEC member, previously refused to participate in reductions but eventually consented to the agreement. This is the first agreement with a non-OPEC member in fifteen years.
The price of oil reacted positively to the proposed reductions resulting from OPEC’s meeting. Following the meeting, on Thursday morning December 1, 2016, oil prices climbed above $50 per barrel. On Monday, December 5, 2016, as of 3:56 pm CST, the Brent Crude price was $54.19. This price is slightly down from the year high Brent Crude price set earlier in the day but is still suggesting 2017 will start off much better than 2016. Financial firms and journalists, however, are skeptical as to whether the price increase will sustain.
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