The Organization of the Petroleum Exporting Countries (OPEC) is discussing a plan that could cut oil production by almost 700,000 barrels a day, but experts note this production decrease isn’t likely to see gas prices rise in the near future.
While the 700,000 barrel per day reduction is sizable, oil experts don’t think it is drastic enough nor expedient enough to bring the oil market back to equilibrium, the Wall Street Journal reports.
OPEC released a statement Wednesday about the current state of affairs in the market for oil over the past two years following its Sept. 28 meeting in Algiers, Algeria. The Organization stated: “In the last two years, the global oil market has witnessed many challenges, originating mainly from the supply side. As a result, prices have more than halved, while volatility has increased. Oil-exporting countries’ and oil companies’ revenues have dramatically declined, putting strains on their fiscal position and hindering their economic growth.”
There are some other factors that OPEC should also note. Namely, the rise in non-OPEC U.S. oil drillers. Daniel Yergin, vice chairman of IHS Market, told WSJ that U.S. drillers were quick, able, and entrepreneurial enough to produce oil while OPEC stumbled. As a result, “there’s a lot more oil that is not OPEC oil.”
In order to balance the oil market, OPEC decided to have a “target ranging between 32.5 and 33.0 mb/d (million barrels per day), in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward.”
For now, at least, it appears Americans will keep experiencing lower gas prices as a result of the OPEC oil glut.
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