OPEC’s move to protect OIL prices

OPEC (Oil producing and exporting countries) members agreed to cut output by 3.4 percent to boost up the oil prices. Crude oil is continuing downtrend from the last one month and it fell to a seven-month low of $57.75 on October 4.

Saudi Arabia already started trimming its production by 200,000 barrels a day. Remaining OPEC members Libya, Algeria, Kuwait, Venezuela and Nigeria, which promised to lower the production by 1 million barrels a day. This report made the oil prices to reach 60$ a barrel.

I think this cut in production will create the demand and once the global demand increases, OPEC may increase the production. But this may initially hurt the profits of Saudi Arabia, largest oil producing country.