Oil Prices in the international Market on Wednesday soared more than 10 percent to over $50 per barrel. This new price happens to be its highest so far. It was gathered that the collective agreement of some of the world’s largest producers to cut down production for the first time since 2008 in a bid to support the prices was instrumental to the sudden rise witnessed.
The member-countries of The Organization of the Petroleum Exporting Countries (OPEC), which accounts for one-third of global oil supply, agreed to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent,to 32.5 million bpd. The cut will put production at the low end of a preliminary agreement struck in Algiers earlier in September, and will in turn reduce output of barrels per day (bpd).
Saudi Arabia, the group’s de facto leader, Saudi Arabia has offered to take the lion’s share of cuts. She would reduce her output by almost 500,000 bpd to enable the projected effects on the General oil price. Other country that had also agreed to reduce large amount of output include Iraq, OPEC’s second largest producer that wasn’t initially pleased with the plan will reduce output by 200,000 bpd.
Amazingly, Russia (Non-OPEC member) which had also long resisted cutting of output and had pushed its production to new record highs recently have also agreed to cut output by 300,000 bpd. We hope to see more of the increase of these essential commodity as suppliers are beginning to see to terms.
Petroleum is mostly used,by volume for the production of fuel oil and gasoline. It is an essential commodity for mechanised production.