The Organization of the Petroleum Exporting Countries (OPEC) renewed an agreement with 10 other crude-oil producers to withhold output through March 2018, a move aimed at putting a floor under the price of oil.
The pact, reached Thursday, deepens an alliance between OPEC and Russia, which produces more crude oil than any other country but isn’t a member of the cartel, the Wall Street Journal reports.
By keeping production at about 1.8 million barrels a day lower than late 2016’s levels, the group is suppressing about 2 percent of global supply.
While the initiative is expected to provide some support to oil prices, investors had been expecting deeper cuts in output, the Journal noted.
Oil prices fell about 4 percent Thursday after news of the deal spread, with US benchmark crude declining to US$49.17 a barrel.
A longer period of the same level of production disappointed investors in part because of the widely held expectation that US shale will continue to ramp up, keeping supply high and dampening prices.
– Contact us at [email protected]