The Organization of the Petroleum Exporting Countries (OPEC) has been in the news recently for its adherence to its commitment to cut oil production. This has caused a $2 increase in WTI crude oil prices, according to Forexlive.
OPEC is a group of 13 oil-producing countries that control around 44% of the world’s oil production. The organization was formed in 1960 to coordinate and unify the petroleum policies of its member countries and to secure fair and stable prices for petroleum producers.
In December 2018, OPEC and its allies, including Russia, agreed to cut oil production by 1.2 million barrels per day (bpd) in an effort to boost oil prices. The agreement was extended in July 2019, with the group agreeing to cut production by an additional 500,000 bpd.
Since then, OPEC has been adhering to its commitment to cut production, with the group’s compliance rate reaching 107% in December 2019. This means that OPEC countries are producing less oil than they agreed to, which has helped to reduce the global supply of oil and support prices.
The $2 increase in WTI crude oil prices is a result of this reduced supply. WTI crude oil is a benchmark for oil prices in the United States, and its price is influenced by a variety of factors, including supply and demand.
The reduction in supply caused by OPEC’s adherence to its commitment has helped to support WTI crude oil prices, which have been hovering around $60 per barrel in recent weeks. This is good news for oil-producing countries, as higher prices mean higher revenues.
However, higher oil prices can also have negative effects on the global economy, as they can lead to higher inflation and slower economic growth. This is why OPEC and its allies have been careful to balance their desire for higher prices with the need to avoid causing economic harm.
Overall, OPEC’s adherence to its commitment to cut oil production has had a positive effect on WTI crude oil prices, which have increased by $2 as a result. While higher oil prices can have negative effects on the global economy, OPEC and its allies have been careful to balance their desire for higher prices with the need to avoid causing economic harm.
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- Source: https://zephyrnet.com/wti-crude-oil-climbs-2-as-opec-sticks-to-its-word-forexlive/
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