The Organization of Petroleum Exporting Countries (OPEC) has reached a new deal to curb world production. Oil prices skyrocketed and they will continue to rise, an analyst told RT.
The agreement between the 15 OPEC and Allied states led by Russia was reached at a meeting between OPEC and world oil producers in Vienna, Austria on Friday. According to the agreement, global crude oil production will be reduced by 1.2 million barrels per day (bpd) for the first six months of 2019.
The deal comes as oil prices have fallen steadily for six months, rising 30% over the past two months. However, while low oil prices are beneficial to consumers in the United States and other Western countries, they threaten to feed into the budgets of countries like Saudi Arabia that depend on black gold for almost 90% of their budget revenues and over 40 one hundred of its GDP.
While President Trum has repeatedly called on OPEC to keep things as they were, his words were intact on Friday.
Hoping that OPEC will support oil flows as it is is not limited. The world does not want to see or need higher oil prices!
– Donald J. Trump (@realDonaldTrump) 5 December 2018
The reduction was significant, international oil economist Mamdouh Salameh told RT. "In June, Saudi Arabia and Russia added 650,000 barrels per day," he said.
"Against the wishes of most OPEC members … as a result, the market began to relax and this was reflected in the fall in oil prices." Keeping OPEC means that good times for western consumers can dry out. "The foundations of the world oil market are still stable," Salame said. "World oil demand is growing rapidly and the economy is growing."
After all, I expect a decrease in prices to begin to rise, "he predicts.
"I would not be surprised if they exceeded 70 (barrel dollars), and in exceptional cases they could even reach 80, as they did in October.
Oil prices skyrocketed a little over four percent after the news broke the deal, with benchmark Brent rising to $ 63.04 a barrel at 14:08 on Friday. While Salameh warned of rising prices, even a $ 80 rise would be a little less than $ 101 a barrel that crude oil commanded in 2014. Venezuela, Iran and Libya were released from production cuts due to the already declining production of Venezuela. the economic future under US sanctions and the turmoil in Libya's security.
To reach the 1.2 million barrel target, OPEC will cut production by 800,000 barrels, while Russia and other manufacturers will cut production by 400,000 barrels. Saulmeh told RT that the deal would ease the economic pressure on Saudi Arabia, which needs an oil price of $ 80 or more to balance its budget. Russia, on the other hand, has a more diversified economy and can live with $ 40 a barrel of oil.