<p>After two years of low prices and staggering losses, a desperate OPEC has finally agreed to limit production. The move sent prices soaring, but analysts warn that the effect won&rsquo;t last. ;</p>
<p>The price of oil peaked in June 2014 at about $115 before plummeting to less than $35 by February 2016. More recently, prices have hovered between $40 and $50 per barrel. ;</p>
<p>OPEC&rsquo;s decision to limit production is aimed to help floundering nations whose economies are dependent on oil exports.</p>
<p>A final decision was reached this Wednesday in Vienna. OPEC nations agreed to ;cut crude production by about 1.2 million barrels a day (4.5%) during the first six months of 2017. This will be the first cut in eight years. ;</p>
<p>Oil prices have risen 15% since the announcement, but remain far lower than they were in 2014. ;</p>
<p>Wednesday&rsquo;s deal is proof that &ldquo;the weight and resilience of OPEC is still there and will continue to be,&rdquo; says Qatar Energy Minister Mohammed bin Saleh al-Sada. ;</p>
<p>Russia, while not a member of OPEC, is also involved in the deal. Putin, who pushed for production cuts <a href="https://punchingbagpost.com/putin-will-urge-opec-to-limit-oil-production-to-raise-prices/" target="_blank" rel="noopener"><strong>back in September</strong></a>, has agreed to cut Russia&#8217;s output by 300,000 barrels a day. ;</p>
<p>Saudi Arabia is OPEC&rsquo;s biggest producer &ndash; meaning it has also suffered the highest losses. While the Saudis <a href="https://punchingbagpost.com/saudi-arabia-aggressive-oil-production-plan-has-back-fired/" target="_blank" rel="noopener"><strong>allowed the oil glut to occur</strong></a> in an attempt to compete with shale production in North America, they have now agreed to cut production by 486,000 barrels a day.</p>
<p>Saudi Arabia and Iran seem to be locked in a pumping competition, and many wonder if limiting production for a mere six months will do anything to alleviate the oversupplied market. Saudi Arabia currently produces over 10 million barrels a day, and Iran&rsquo;s production has increased by one third since the lifting of sanctions in January. ;</p>
<p>&ldquo;Iran&rsquo;s influence in OPEC, and indeed in the region, has been growing since the lifting of nuclear-related international sanctions,&rdquo; says OPEC analyst Bhushan Bahree. ;</p>
<p>War-torn Libya has doubled production since August and hopes to reach 900,000 barrels per day by January. Iraq and Nigeria have also increased production. ;</p>
<p>Fracking companies in the US are the ;biggest potential threat to OPEC&rsquo;s plan. If higher prices convince these companies to start drilling again, supply will go back up and prices will fall. OPEC will have accomplished nothing &ndash; and it will have lost market share. ;</p>
<p>&ldquo;If higher prices bring higher output, prices will not remain up for long,&rdquo; warns Middle East Energy Analyst Jim Krane. &ldquo;It won&rsquo;t be long before we&rsquo;re back where we started.&rdquo;</p>
<p>Let&#8217;s also keep in mind that ;adherence to OPEC&rsquo;s deal is not a given. Further issues include the enmity between Iran and Saudi Araiba as well as President-elect Donald Trump&rsquo;s vow to rip up the JCPOA. ;</p>
<p><strong>Editor&#8217;s note:</strong> OPEC has no choice, many of the ;oil producing countries, including Saudi Arabia, Venezuela and Russia are headed toward bankruptcy without a significant change in condititions. We predicted this earlier this summer. Price will rise. Unfortunately, Trump will be substantially improving America&#8217;s oil production capabilities, so they are in for even worse times.</p>
<p>Their gambit to put American shale oil companies out of business has failed.</p>