The world of crude oil is buzzing right now, as OPEC is currently meeting in Vienna, with a goal of reaching an agreement over production levels within the next 6 months. Oil prices dropped over 3 percent on Thursday as OPEC agreed to cut production. However, the cartel is waiting to decide on the actual size of reduction until after a discussion with Russia. This could delay the decision until Friday, when OPEC is set to meet with non-members.
International benchmark Brent crude fell $1.66, or 2.7 percent, at $59.90 a barrel around 11:03 a.m, after falling to a session low at $58.36. U.S. West Texas Intermediate (WTI) cruder was down $1.79, or 3.4 percent, at $51.10, falling back towards the session low of $50.23.
OPEC wants to reach an agreement with producers over output levels. This puts pressure on top OPEC producer Saudi Arabia, who has been leading calls for the group to slow output. However, there is fear that a trimming output would cause an economic slowdown, which in turn would cause a significant drop in fuel demand.
Oil producers were planning to implement a plan to remove 1.3 million barrels per day from the market earlier this week. However, Saudi’s Energy Minister explained that a cut of 1 million would have to suffice. The oil price has been hammered by concerns that supply will outstrip demand next year, weakness in global markets and technical trading that has extended the selling.
It will be incredibly interesting to witness the results of the Thursday and Friday meetings. Hopefully, OPEC producers can come to terms in a way that benefits both the producer, and consumer.