Despite urging from President Trump to continue pumping oil, both OPEC and Russia have joined in agreement with other oil producers around the world to cut production. The worldwide cartel pledge has agreed to cut back output by 1.2 million barrels a day, in hopes to stem the sharp fall of oil prices around the world.
Sure enough, nearly immediately upon release of this announcement, the price of crude oil shot up almost 4.5 percent on Friday morning, to $53.75 barrel. Brent crude also surged more than 4 percent on the day (to reach $62.55 early in the day). This shift, then, called for analysts to make a bigger reduction than they had previously anticipated. This is important, however, since oil prices have been in a dramatic slide—down as much as 30 percent—over the past few weeks on the heels of oversupply and signs of a slowing economy.
Of course, this drop is also reflected in the cost of oil products. Gas prices, for example, have fallen: the national average for regular unleaded gasoline is now $2.44 per gallon. That is a drop of 30 cents from just one month ago.
As you might expect, Iran was the final country to holdout during the most recent OPEC talks. In fact, Iran’s resistance contributed to an overall failure to agree on the size of the pending cut and which nations would be exempt from the cut, dragging out Thursday’s meeting.
Then, upon resuming of talks on Friday morning, Iran persisted in its refusal to accept the specific wording in the agreement. Still, Russian Energy Minister Alexander Novak—who also happens to be the broker of this deal—flew in directly from Moscow specifically for the non-OPEC part of the meeting. He also made time for individual talks with Iranian oil minister Bijan Zangeneh and Saudi Arabian oil minister Khalid al-Falih.
With talks resuming on Friday, though, new reports emerged that indicated Russia could be prepared to cut oil production by as much as 200,000 barrels per day as long as it is part of an OPEC supply reduction deal.