OPEC has been able to finally meet. As expected, the cartel was able to agree that any country within the group that has space capacity will be able to increase their oil production. Arguable, Russia and Saudi Arabia will be standing to gain the most.
In practice, Russia and Saudi Arabia will be able to carry the lion’s share. How individual nations make decisions regarding the amount that they produce, while still attempting to stay below a collective cap, opens up a whole lot of uncertainty regarding the said decision.
Today, it was announced that the oil output is set to increase by 1 million barrels per day after Opec was able to reach a deal.
The shares in some London-listed oil companies such as BP and Shell increased following the release of the news.
According to various reports, the group of 14 oil-producing nations was able to reach an agreement following the meetings that were held in Vienna today.
The meetings are scheduled to continue until Saturday. It will be the day when Opec is set to meet with its non-Opec allies.
The actual gain in output is said to be smaller than 1m barrels per day, as some nations will not be able to produce enough to meet the said quota, while the others will not be permitted to cover the shortfall.
Some analysts suggest that the gain may be closer to approximately 600,000 barrels per day.
Khalid al-Falih, the Energy Minister of Saudi Aradia, said that an “immediate flood” of oil that will be coming back into the market should not be anticipated.
This afternoon, the shares in BP were up by 2.6 percent, while A shares and B shares of Royal Dutch Shell made some similar gains.
Outside of the FTSE 100, Premier Oil and Enquest also made market-leading gains, at 7.4 percent and 9.6 percent respectively.