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ARTICLE 1 - ANALYSIS 2 Article “Saudi Arabia, Others Inch Closer to Oil Output-Cut Pact.” By Summer Said, Christopher Alessi, and Benoit Faucon. The Wall Street Journal. November 11, 2018. Summary The article discusses the overproduction of oil which has led to a decrease in the price per barrel of oil. Saudi Arabia, which is the leader of the Organization of the Petroleum Exporting Countries (OPEC), wants to cut their supply in the market. The article discusses how there have been meeting of OPEC to come up with solutions. One of the proposed solutions is that each producer of oil to cut the supply in the market so as ensure that the output is reduced. Russia, which is the biggest supplier, only agreed to cut the crude production if the consensus is reached. The article also discusses how a sanction of the U.S. on Iran has led to shortages thus leading to a reduction of the prices per barrel. Analysis The article indicates how overproduction of crude oil leads to decreased prices and this can lead to an unstable worldwide economy. Brent crude is the international benchmark that is used and by November 5, it had reduced by $10 per barrel leading to 21% decrease for the U.S.A oil to $60 per barrel. The decrease in oil prices means that there will be a reduction in the transportation industry as well as other costs in the business industry. The decrease in prices is good news for importers but it is not good for the producers. This is the main reason as to why the members of OPEC are frequently meeting to come up with solutions that will rectify the current state of producers. Lower prices of oil help in reduction of cost of living. This means that the costs of transportation that is related to oil will reduce, leading to lower cost of inflation and reduced rate of inflation.
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  • Summer '17
  • paul
  • OPEC

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