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Reports: OPEC May Have Deal to Cut Production, Boost Prices

  • Jim Randle

Crude oil prices rose Wednesday, following reports that the Organization of Petroleum Exporting Countries had reached a deal to cut production. It would be the first such agreement in eight years.

The news stories cite unnamed sources, and some of them say OPEC production would be cut from just over 33 million barrels a day to 32.5 million. OPEC accounts for about one-third of the world's oil production.

Oil prices once were above $100 a barrel, but began dropping drastically in 2014 as oil production from fracking boosted U.S. output.

In the past when oil prices fell, OPEC members would agree to reduce production, which prompted prices to rise. Saudi Arabia, OPEC's key member, generally would be the one to cut production sharply. But more recently, the Saudis said they were not going to cut production unless other members followed suit; production remained high, and prices fell.

Some analysts speculated that the Saudi action was intended to push prices so low that relatively expensive U.S. crude producers would be forced out of business. U.S. frackers proved more resilient that many experts expected.

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