The Organization of the Petroleum Exporting Countries (OPEG) and allies including Russia are likely to impose restrictions on the output of crude oil by reducing at least 400,000 barrels per day for a week.
The decision is taken in the backdrop of the surging global oil price and the increase of china’s demand for oil.
The OPEC and its allies are the main groups that take the vital decision about the output of oil globally and supervise the balance between the demands of the countries and support prices.
Surging of the global Oil Prices
The price of oil reached $ 61 a barrel on Monday, December 2, 2019. As reported by the two leading benchmarks for global oil prices, the crude oil price of Brent crude added $ 1.47 to the existing price of $ 61.96 per barrel and for the US West Texas Intermediate (WTI) crude, the price is fixed at $ 56.53 per barrel adding the rise of $ 1.36.
Despite the deadlock of the US-China trade deal, Chinese domestic companies had recently gained a significant return of their markets and sought more demands for oil.
Brent and WTI’s main concern was that the trade war between the US and China, the two world’s biggest oil consumers caused the rise of oil prices.
Meanwhile, the rise of global oil prices is not likely to affect the US as, reported by the US government, the production of oil in the country has been increasing significantly.
In September alone, the production of oil in the US had reached a new record of 12.46 million barrels per day which can easily fill the gaps of supply from OPEC.
Likely to Curb of oil Output
To discuss the existing issues of current oil prices, OPEC’s ministers will meet in Vienna on Thursday, December 5, 2019, and the wider OPEC and its allied group will meet the next day.
It is likely that the issue of curbing the oil output might invite different opinions among the leaders of OPEC in the meeting. Considering the majority of the leaders are willing to impose curbing of output, a source stated, “A deeper cut could boost prices, which would bring on more shale output”.
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