Russia Joins OPEC In Agreement To Cut Oil Production By 1.2 Million Barrels A Day
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Today Russia joined with OPEC in an agreement to cut oil production by 1.2 million barrels a day. The move aims to stabilize some of the recent sharp fluctuations in oil prices. But as NPR's Yuki Noguchi reports, the accord also shows how geopolitical power dynamics are shifting.
YUKI NOGUCHI, BYLINE: The price of crude oil spiked to $76 a barrel in October. Since then, prices have plummeted by a third. Now OPEC, Russia and other producers are aiming to get supply and demand back in balance. That would push prices back up, something President Trump has vocally opposed. But what made this agreement unusual is the prominent role played by Russia, which is not an OPEC member. Devin Geoghegan follows oil markets for Genscape. He says that didn't used to happen.
DEVIN GEOGHEGAN: You didn't see OPEC waiting on Russia so that they could finalize a cut. And I think that was probably the most surprising of all the developments.
NOGUCHI: He says it points to changing power dynamics. OPEC's influence has eroded. Russia and the U.S. have become more dominant players. Just this year, the U.S. has taken over as the world's largest producer of oil. This shift went on display this week at OPEC's meeting in Vienna. Saudi Arabia, OPEC's most powerful member, appeared to weigh the Trump administration's calls to keep oil prices down against Russia's calls for bigger production cuts. Tensions between these companies are running very high. And because of that, Geoghegan says predicting oil markets has become a lot harder.
GEOGHEGAN: And in general, you can no longer really count on the geopolitics to be clear. You've got to look elsewhere. And you've got to look to other indicators to try and figure out what these countries are doing in real time and what they're going to do.
NOGUCHI: Meanwhile, smaller oil-producing countries need the money and grouse about their waning influence. Chris Midgley, an analyst with S&P Global Platts, says the agreement is only as good as the members' willingness to live up to their pledges.
CHRIS MIDGLEY: The cuts - you know, they're good announcements. What actually happens in reality is often very different.
NOGUCHI: Oil prices were up about 4 percent on the news today. Yuki Noguchi, NPR News, Washington.
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