Economic Miracle: OPEC agrees to reduce oil production

29.09.2016
Algeria

Contrary to the predictions of analysts, OPEC members agreed at a meeting in Algeria to produce approximately 700,000 less barrels per day. Given this decision, the price of Brent crude oil has increased by almost 6%.

The first time since 2008

This decision was taken for the first time since 2008. The level of oil production will be reduced to 32.5-33 million barrels per day. According to experts, the current volume is 33.24 million barrels. The production volume for each country will be determined by the next formal meeting of the organization to be held in November.

Politics and oil

Oil is not only an important energy resource, but also a political tool. Its price depends on many factors, which today means primarily information. On the eve of the meeting, a number of Russian and foreign liberal media reported that the event would be purely advisory in nature, and that  prices could fall to $20 a barrel in the near future.

Russia’s victory

This decision is clear evidence of changes in Moscow's role in the international arena and in such important organizations as OPEC. The lowering of oil prices and the dumping done by Riyadh were used by the West as a pressure tool against Russia following the events of the Russian Spring and reunification with Crimea. However, after the start of Russian military operations in Syria, Moscow’s image improved significantly. Saudi Arabia, whose relations with Washington have deteriorated badly, has been forced to seek support from Moscow. Perhaps a compromise was reached earlier which entailed this OPEC decision, as Riyadh plays a critical role in OPEC.

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