Louisiana’s oil patch has been suffering from low oil prices for the past few years. It has depressed economic growth in this state and hurt the state’s finances.
But today, OPEC has finally thrown Louisiana a lifeline. For the first time since 2008, OPEC’s oil ministers have agreed to decrease oil production.
OPEC agreed on Wednesday to cut its oil output for the first time since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.
Two sources in the Organization of the Petroleum Exporting Countries said the group would reduce output to 32.5 million barrels per day from current production of 33.24 million bpd.
“OPEC made an exceptional decision today … After two and a half years, OPEC reached consensus to manage the market,” Iranian Oil Minister Bijan Zanganeh was quoted by Iran’s SHANA news agency as saying, without giving details.
OPEC’s informal meeting in Algeria was still continuing after five hours.
How much each country will produce is to be decided at the next formal meeting of OPEC in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia, sources said.
In the short term, this will raise oil prices and that will be positive for Louisiana’s oil industry. It will also be a positive for the state’s finances.
The Saudis were trying to hurt Russia and Iran by opposing oil production cuts. If they would’ve destroyed America’s fracking revolution, it would’ve been great as well. But the Saudis were burning through their foreign reserves, but apparently they had enough. This will give fracking another boost in this country and here in Louisiana.