Oil prices skyrocket

This will be the first time in eight years that the Organization of the Petroleum Exporting Countries (OPEC) has done so.

The agreement was approved at a meeting in Algeria yesterday. Following the news, world oil prices skyrocketed. US crude - WTI at one point increased by 4.6 to 46.71 USD a barrel. Meanwhile, Brent crude increased by 6.5% to 48.96 USD a barrel.

Crude oil prices increase. Illustration photo

A global supply glut has sent oil prices plunging for more than two years. And OPEC has refused to cut production ever since.

However, according to yesterday's agreement, oil production here is forecast to fall to 32.5-33 million barrels a day, from the current level of 33.4 million barrels. Saudi Arabia - the largest oil producer - is expected to reduce 350,000 barrels a day. Other OPEC countries will also reduce. However, detailed figures have not been announced.

The three countries exempted from this are Iran, Nigeria and Libya. Economic sanctions on Iran were lifted earlier this year. Libya and Nigeria have had several oil production facilities attacked by terrorists in recent months.

In mid-2014, oil prices peaked at $100 a barrel. However, oversupply pushed prices down to a low of $26 a barrel in February, which also sent global stocks into the red earlier this year. Oil prices have recovered somewhat in recent months, with WTI crude hovering around $47 a barrel.

According to VNE