Stock prices soared today when the Organization of the Petroleum Exporting Countries (OPEC) President Secretary General Mohammed Bin Saleh Al-Sada announced an agreement to cut shale output for the first time since 2008. The agreement will take effect in January, reducing output by more than 1 million barrels per day. Non-OPEC producers have tentatively agreed to cut production as well.
According to the International Energy Agency (IEA), global gasoline demand has peaked and is expected to sharply decline. These predictions have led to efforts to shore up oil prices. Though, given that these forecasts were made based on numerous countries’ participation in pacts such as the Paris Climate Agreement, experts question whether these projections will come true. President Elect Trump has indicated plans to withdraw from the agreement as have others.
OPEC watcher Amrita Sen stated, “OPEC has proved to the skeptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut.” The response to today’s announcement was evident in the stock market where crude oil immediately surged by more than 8%. Fracking stocks also saw an increase, which is a promising beginning to a deal that intends to boost global economic growth.
