OPEC Reaches First Output Cut Agreement
In a surprise move, OPEC agreed to cut production for the first time in eight years after Saudi Arabia and Iran reached a compromise.
Traders were taken by surprise, with most expecting OPEC to continue its pump-at-will policy, and oil shot up more than 5% after the news broke Wednesday, Bloomberg reports. OPEC agreed to limit production to no more than 33M barrels a day, except for Iran who will be exempt.
Economists see the move as a return to supply management after two years of free oil markets, and while it’s generally regarded as a good sign for the energy industry, it also means prices are likely to go up at the pump. [Bloomberg]