After several weeks of ongoing discussion regarding oil production in Russia and Saudia Arabia the two countries have reached an agreement with OPEC. On Tuesday leaders from both countries agreed to freeze oil output; however, the deal was contingent on additional countries joining (Reuters). OPEC members Qatar, Venezuela and Kuwait have already stated they are ready to freeze output as well. Without the agreement of other countries on the matter this will only be a temporary solution to the issue (Forbes). However, the countries’ willingness to cooperate might speak to the depths of the issue. The low price of oil pushed Saudi Arabia to make budget-cutting moves, i.e. raising the price of gasoline, electricity and water. A Persian-Gulf oil official stated, “The main driver is prices going below $30 a barrel, which was very disturbing” (New York Times).
This deal does not yet include Iraq and Iran. The leaders of Iran could determine the fate of the entire operation as they are currently in a diplomatic agreement with the United States (Vox). The major goals of this agreement with the U.S. are to ease the trade of oil from Iran and to ultimately increase oil production. The U.S., third in the world’s oil production, is unlikely to cut back as well. American production is down from the summer it may not be enough to merit a freeze in productions (Vox).
Tags: Iran, Russia, Oil, United States, Jaczko, Saudi Arabia, OPEC