The Organization of Petroleum Exporting Countries has agreed to cut oil supplies in an effort to keep oil prices high. The OPEC ministers met Thursday in Vienna.
OPEC President Rilwanu Lukman announced the decision to cut production. He said the move would take 1.5 to 1.7 million barrels of oil off the market. The production cutback is to take effect January 1.
In addition to agreeing to production cuts, OPEC members also agreed to raise official production quotas, to 23 million barrels a day, from 21 point seven. To boost revenue, many OPEC members have been producing much more than their quotas stipulate. The increase in the daily quota is designed to bring the official quota into line with actual production.
Thursday's agreement sent oil prices climbing. In London, the price of Brent North Sea crude for January delivery was up to $26.33. But the cartel is concerned that crude oil prices could collapse next year, which is why they are trying to stabilize production quotas to keep too much oil from flooding the market and lowering prices.