It was talked about for weeks. Then it happened. (Or at least a variation of it happened.) Saudi Arabia and Russia, along with Qatar and Venezuela, said on February 16 that they would freeze oil production at January levels, provided other big producers agreed to join them. A day later, Iran said it liked the idea of a coordinated effort to boost prices, yet it stopped short of pledging to limit production. These are some of the most significant developments in the oil saga for quite some time. But what does it all mean? No one seems to know.
A week ago, the U.S. benchmark for crude had sunk to around $26 per barrel. The price now is around $31. That’s not a big move. It suggests the Saudi-led Organization of the Petroleum Exporting Countries and Russia have some work to do if their goal is to lift oil’s value. (Russia is the world’s second biggest producer after Saudi Arabia, but isn’t a member of OPEC.) “The agreement between Saudi Arabia and Russia is as water-tight as a colander,” Krishen Rangasamy, an economist at National Bank of Canada, said after the initial announcement.
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