The Two Biggest Oil Producers Agree To Halt Production...But It Comes With A Catch
In an effort to combat the oil price plunge, Saudi Arabia and Russia—the two biggest oil exporters in the world—announced a deal Tuesday to freeze production increases.
A production freeze would help crude prices rebound after a months-long slump has brought oil down to record lows. And if global production were frozen at January’s level, output and demand would start converging toward the end of 2016, the International Energy Agency says.
However, the proposal comes with a significant caveat: Iran, Iraq and other big producers would also have to pull back their output—an unlikely compromise, considering both Iran and Iraq have made it pretty clear that they won't, the Wall Street Journal reports.
Iraq’s production currently sits at a record 4.35 million barrels a day to fund the fight against ISIS. Meanwhile Iran plans to double its exports to return to pre-sanction levels, flooding a market that already has too much supply. [WSJ]