Today, the Organization of the Petroleum Exporting Countries (OPEC) will be conducting a highly anticipated meeting regarding the future production of oil and its prices. The main issue the meeting will focus on is the amount of oil supplied by members of OPEC, with an emphasis on the leading oil producing countries in the group. Investors are anxiously awaiting the outcome of the OPEC decision to potentially cut oil production globally. Outcomes of the previous meeting conducted in Algiers seemed hopeful, as the majority of OPEC members agreed to cut as much as 2 percent of their total oil production.
Cutting oil production could open doors for other producers, including the U.S., which could increase their output at the expense of leading OPEC members. Consequently, if OPEC refuses to cut oil production, the global economy will maintain a large surplus of oil, and continuing to hurt OPEC members who are struggling with low oil prices.
Many analysts anticipate OPEC will collaborate together to create a deal that cuts some oil production at its meeting in Vienna. However, it is not certain that all members of the OPEC will follow their instruction, as the International Energy Agency (IEA) released a statement reporting that OPEC output recorded a record high in October after production recovered in Nigeria and Libya. Additionally, output flows in Iraq has hit an all-time high.
Regardless of the outcome of the OPEC meeting, the global markets and economy will continue to remain extremely sensitive to shifts in oil prices. Analysts predict that a failure to come to an agreement to cut oil production could force prices below $40 a barrel, while a successful compromise could raise oil prices above $50 a barrel.
Update: Following the meeting, OPEC did indeed decide to decrease oil production, by over 1 million barrels a day, or about 1% of global output.