OPEC Agrees to Reduce Oil Production

OPEC+ reached a deal yesterday in order to help stabilize the oil market over the next couple years. In recent weeks, largely due to the pandemic, gas prices have dropped to a historic 18 year low. As a result, Saudi Arabia, Russia and other major oil producing nations have finally agreed they will reduce production by 9.7 million barrels a day in the months of May and June. After that they will slowly increase production until April of 2022 when the deal expires. They hope by reducing production to bring some stability to the hard-hit market. However, a decrease in production will not help make up for lack of demand as millions of people remain under stay-at-home orders. It’s estimated 9.7 million barrels only accounts for about 10% of the world’s usual supply. The estimated collapse in demand due to coronavirus is predicted to far exceed the reduction rate in the coming months.