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OPEC agrees on oil output limit

Oil prices are being affected by the OPEC agreement to cap production at 30 million barrels a day.

Jeremy Hobson: Now to news just in from the Organization of Petroleum Exporting Countries -- also known as OPEC -- also known as one of the main reasons oil and gas prices go up and down. Reuters is reporting that OPEC member countries will hold global production at about 30 million barrels of oil per day.

Christopher Werth reports.


Christopher Werth: OPEC meetings are generally about one thing: How to keep pumping out just enough crude to satisfy global demand, while keeping profits at a level the world's oil producing countries like. These days that's just above $100 dollars a barrel.

But Leo Drollas, an economist at London's Centre for Global Energy Studies, says today's decision comes at a time of great uncertainty over which direction oil prices will go. There's economic turmoil in the U.S. and Europe, and political turmoil in the Middle East.

Leo Drollas: These are the two main considerations at the moment: the slowdown in the global economy, which is taking place, and the possibility of a disruption in supplies as indeed happened this year with the loss of Libyan output. So we're at a cliff edge.

For example, an economic slowdown would mean oil prices go over that cliff, dropping lower. A disruption to supply in an oil producing country could cause prices to rise. In any case, Drollas says today's decision will keep gas prices high for everyone.

In London, I'm Christopher Werth for Marketplace.

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