'OPEC-Plus' Cuts Oil Production to Stabilize Prices

Global oil prices stabilized in the first decade of December 2019 in response to the 'OPEC-plus' deal to cut oil production by 1.2 million barrels per day between January and June 2019. The price of Brent crude—a global benchmark—rebounded slightly to about $60/barrel after falling from a recent peak of approximately $85/barrel in early October.

• The world's largest oil producers increased production during the summer and fall in anticipation of potential supply disruptions out of Iran because of the threat posed by US sanctions.
• As it became apparent that the US sanctions would not lead to the expected decline in Iranian oil exports, market speculation turned to oversupply scenarios, leading prices downward steadily during October and November.

Announcement of 'OPEC-plus' deal had short-term effect on market. And on December 17 oil prices went down to their lowest level in over a year pushed by fears of oversupply and slowing global growth.

• Cut of oil production under 'OPEC-plus' deal starts on January 1, 2019. Now, in week and a half before the New Year US and Russia extract crude oil at record 8 mb/d and 11.4 mb/d respectively.
• Tightening of monetary by US Federal Reserve, global trade wars and capital outflow from emerging markets create risks of decelerating global economy in 2019.