The Organization of Petroleum Exporting Countries (OPEC) reached an agreement Wednesday morning to cut oil production.
This would be the first production cut by OPEC since 2008, Reuters reports.
OPEC began flooding the global marketplace with oil in 2014 in an attempt to depress prices and counter new competition. The group of oil-producing countries pumped out 31.3 million barrels per day as of May 2015, the highest level of oil production since August 2012. As a result of the deluge, the price of oil per barrel fell from $107.5 in June 2014 to $45 in January 2015.
Investors were anxiously anticipating the Wednesday announcement, as they gobbled up oil futures driving up the price of crude oil. Crude oil futures begin ticking up just before 2 a.m. Tuesday. At that time, the price of crude oil was $45.56. By 8:15 a.m., crude oil futures soared to $48.39. (RELATED: Oil Futures Skyrocket As Investors Await OPEC Decision)
Brent crude oil features ticked up to more than $50 a barrel on the news of the production cut.
Energy investors have long awaited this announcement, expecting OPEC to reach an agreement for over a year. Many predicted OPEC would reach an agreement Monday, after Iranian oil minister Bijan Zanganeh hinted that the conglomerate would likely agree to cut production in the near future.
The decision to cut oil production was such an arduous process in large part because of disagreements between Saudi Arabian and Iranian leadership. The two dominate oil producing nations went back and forth at every meeting over the terms of what a cut would look like, but this week seemed to lay down the swords.
The news will come as a delight to Venezuela, whose economy has been devastated by the deflated price of oil. Venezuela has repeatedly pleaded with OPEC to reach an decision for the past 18 months. (RELATED: OPEC Leaves Venezuela Floundering With No Decision On Oil Production)
Crude futures are continuing their surge Wednesday morning, and some expect the price per barrel to reach as high as $55 on the news of the announcement.
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