If you're anything like me, you have had a crazy busy week. Here, I will hit the highpoints of the OPEC deal to keep you up to speed:
Main Takeaway Point: OPEC agreed to cut output and it prompted big gains in crude prices.
- Yesterday, OPEC reportedly "agreed to the outline of a
deal that will cut production for the first time in 8
years."
- Note: It is just a preliminary outline to cut OPEC's collective output, as noted by a Wall Street Journal article today.
- OPEC agreed to limit production to a range of 32.5 to 33 million barrels a day to address oversupply concerns.
- The agreement was reportedly possible because one player was left out – Iran will be exempt from capping production.
- Saudi Arabia agreed to the deal! Reportedly ending Saudi Arabia's flirtation with free oil markets...read more on that here.
- OPEC's next meeting where they
will hammer out more details is scheduled for the end of November.
They still need to agree to a quota for individual producing
countries.
- OPEC also reportedly "faces the task of convincing producers outside of the group, most importantly Russia, to cap their own output."
What does this really mean?
Well, that remains to be seen.
Folks are skeptical of the plan since it is in its preliminary stages. Also, the Wall Street Journal points out: "[e]ven if the premise of the deal holds together until OPEC's next meeting, ensuring that member countries stick to production quotas has been notoriously difficult."
What is the price of crude now?
As of the writing of this post, neither price had broken the $50/barrel mark. Brent Crude was at $49.03 per barrel and WTI Crude was at $47.65 according to Bloomberg Energy.
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