The Organization of the Petroleum Exporting Countries agreed to cut crude oil output by about 750,000 barrels per day in an effort to boost prices.
OPEC agreed in general to reduce oil output to 32.5 million barrels per day from the current 33.24 million barrels per day, according to a Reuters report. The deal did not include details on how much oil each of the cartel’s member countries needs to cut, as those are expected to come at the group’s formal meeting at the end of November.
Oil prices rose 5 percent after the announcement, which is the first cut by the cartel since 2008. OPEC has long been rumored to be on the verge of cutting production to increase oil prices after several years of price collapse.
The cartel kept production high in recent years to drive down prices and maintain market share as U.S. energy producers increased their production. The decision squeezed U.S. fossil fuel companies, causing thousands of workers to lose their jobs as prices plummeted, but it also harmed some member states.
Countries such as Venezuela saw their economies collapse with oil prices and have been arguing for a production cut for years, but have been overruled by Saudi Arabia. The Saudis are the largest producer of oil in the cartel and have convinced their fellow OPEC members to keep production levels high.
A showdown is likely looming at the November meeting in Vienna between the Saudis and the Iranians. The Islamic Republic was only recently able to rejoin the international market as sanctions lifted and wanted to increase their daily production to more than 4 million barrels. A proposal reported Tuesday in the Wall Street Journal would have seen the Iranians capped at 3.7 million barrels per day.
