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How Are OPEC Cuts Affecting The Price Of Oil?

About two months ago, OPEC and other oil-producing countries agreed to reduce their output. Are they following through?

 

COURTESY OF GABRIEL C. PÉREZ

Since OPEC announced to cut oil production on Nov. 30, oil prices have stayed above $50 a barrel in anticipation of the cuts.

For an economy as dependent on the energy industry as Houston’s, that’s good news.

But are OPEC members following through?

 “At the moment it appears that a number of members are following through and making good on their cuts,” Ed Hirs, an energy economist at the University of Houston, said. “But the news is varied. The Saudis have cut more than their original allocation of what the cut was going to be, and we expected that.”

Russia, one of 11 non-OPEC countries that also agreed to cuts, has reportedly reduced output by 117,000 barrels a day.  

But it’s not clear whether some of the other nations are following through.

Hirs said we’ll have a better idea when oil inventory numbers are published near the end of the month.

“If these inventories are remaining stable or shrinking, it would indicate that OPEC cuts are holding,” he said.

Oil prices could reach $60 a barrel again, he said, depending on several factors, including the implementation of the cuts and global demand.

 

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Florian Martin

Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter.Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters and the Houston Press Club.Florian is a native of Germany. His studies in Leipzig...

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