OPEC Plans Oil Production Cuts To Drive Up Gas Prices
By: Sara Smith
Published: Dec 14, 2021
OPEC set to cut oil production by 2 million barrels in an effort to drive up gas prices. The price of oil recently plunged below $45 per barrel.
OPEC is planning to announce cuts in oil output production by 2 million barrels per day in an effort to stabilize gas prices. The news comes after Iran proposed the 2 million barrel reduction. The world oil cartels are hit with a steady drop in oil prices due to the global economic recession.
"The proposal aimed at creating a balance in oil supply and demand in the market," Iran's Oil Minister Gholam-Hossein Nozari said in a statement.
Gas prices are averaging $1.66 per gallon for regular unleaded, according to AAA's national average. This is down from $4.11 per gallon in July.
OPEC ministers plan to meet on Wednesday in Algeria to discuss further cuts in oil production. Oil prices have plunged below $45 per barrel this month after reaching a record high of $147 per barrel in July.
The oil cartels say the cuts are needed to stabilize gas prices and oil supply.
"Otherwise, the OPEC would face a surplus in oil supply which would result in more fall in the price next summer," Nozari said.
The majority of OPEC countries felt a need to put off the decision as they are uncertain what kind of impact it would cause in the market. Market analysts were expecting a cut amid rising concerns of declining gasoline demand in huge markets like the United States.