After Nigeria and other members of the oil group were announced by the Organization of the Petroleum Exporting Countries (OPEC+) as having agreed to reduce global crude oil production output, the price of the commodity increased.
After much deliberation, they decided to reduce production by two million barrels per day, starting in November. The choice is seen as a method to sustain the falling price of crude oil.
Crude oil had a price boom between the end of 2017 and the beginning of 2022 as demand for the product picked up again following the interruption caused by the Coronavirus outbreak and the lockdown put in place to stop further spread.
High demand for crude oil following resumption of industries after the lockdown across the world dragged the prices of crude oil and US equivalent oil, West Texas Intermediate (WTI) above $100, far above the $20 and below price of April 2020.
The prices of crude oil and American WTI have, however, declined below $100 since the second quarter of 2022; they were, respectively, selling for $91.80 and $86.52 previous to the OPEC+ decision.
Since supply will continue to exceed demand and drive the price lower, the reduction in crude production output is anticipated to reduce availability of the good or stop it from flooding the market.
However, because production would be reduced, demand would outpace supply, increasing the price of crude oil. And as of Thursday morning, the price of crude oil has increased 1.71 percent since the announcement on Wednesday, reaching $93.37.
Additionally, the market price of American West Texas Intermediate increased by 0.27 percent and reached $88.00.
While this was going on, it was learned that nations like Nigeria, which have not been able to reach their quota, will only be required to reduce output by one million bpd rather than two million bpd. United Arab Emirates, Iraq, Saudi and Kuwait are the countries leading with the two million cuts.
