In November 2016, Saudi Arabia increased its oil production all the way up to a new record high, even despite the recent agreement within OPEC to cut the cartel’s oil production down to 32.5 million barrels a day.
To be more specific, Reuters reports that the Saudis increased their oil production all the way up to 10,72 million barrels a day, thereby setting a new production high once again. For those of you who don’t know, back in July 2016, the local oil production was around 10,67 million barrels a day, which was the previous major high.
At the same time, Iraq is reported to have raised its oil production to 4,8 million barrels a day against October’s 4.7 million bpd. Also, Saudi Arabia, who is OPEC’s biggest oil producers, promised to cuts its oil production down to 10,05 million bpd according to the recent Vienna Accord reached during the latest OPEC summit on the last day of November.
The record-high production level means that the forthcoming production cut is going to be a real challenge for the Saudis since they have to cut their production next month, in January 2017.
For those of you who don’t know, OPEC and 11 non-OPEC oil producers agreed to cut their oil production by 1,8 million bpd in total, with 1,2 million bpd for OPEC and 0,6 million bpd for Russia and its fellow non-OPEC members.
Despite all the skepticism, the world's major oil producers did finally manage to agree on production cuts for the benefit of higher oil prices as well as a more stable and stronger market of crude oil. Apparently, the breaking news instantly sent oil prices higher all around the globe.
By the way, this is the first time since 2008 OPEC is cutting their production of crude oil. Over the last couple of years, even despite declining oil prices, they have been refusing to implement any production cuts. On the contrary, it has been all about increasing their production slowly but surely. To be more specific, the daily production quotas within the scope of OPEC is going to be cut down to 32,5 million barrels a day.
It should be noted that OPEC and Russia are not the only oil nations suffering from low oil prices. Every single oil producer out there doesn’t mind selling crude oil at a much higher prices. When the prices are low, those oil nations have to spend their reserves, which undermines the economic and financial situation in those countries.
As we have mentioned, OPEC’s decision to cut their oil production resulted in a strong price move in the global market of crude oil. On the first day alone, the prices gained 5% in a matter of hours.
