The international oil cartel OPEC announced today it's reducing production by more than half a million barrels a day, the Financial Times reports. The decision by the cartel, which controls 40% of world oil production, stunned most analysts. The move comes as oil prices, after spiking to an all-time high in July, have dropped 30%, bringing relief to many world economies.
Prices have dipped significantly in recent weeks driven by lower demand, increased supply and a stronger US dollar, said an OPEC statement. “All indicates a shift in market sentiment causing downside risks to the global oil market outlook,” the statement added. OPEC now faces the difficult task of ensuring members abide by its decision. A significant portion of the reduction will have to come from Saudi Arabia, which boosted production unilaterally this summer when prices were high.