What's going on?

Six weeks ago, OPEC members (it�s a group of oil producing countries) agreed to limit their oil production with the aim of boosting the oil price. But the details of the deal are yet to be agreed upon, and after talks this past Saturday it looks like it�s far from a done deal�

What does this mean?

The idea of an OPEC deal was first floated in February (it was a major reason that the oil price rose from its low of less than $30/barrel). All along, many investors were skeptical that a deal would actually be made – which is why September�s �deal� was such a surprise. However, the fact that OPEC members are struggling to agree on the details means that the skepticism may have been warranted and that, perhaps, no real deal will be made.

Why should I care?

For the market: The possibility of a deal has been propping up the oil price.
In the weeks after September�s agreement, the oil price jumped to its highest level in more than a year (around $52/barrel). It has since fallen back below $50, and Saturday�s news will likely put further negative pressure on the oil price when markets open on Monday. The consensus opinion is that it would be difficult for the oil price to remain above $50 without an OPEC agreement to limit production.


The bigger picture: A higher oil price would be helpful for a lot of companies and countries.
The governments of Saudi Arabia, Russia and other big oil producing countries have seen their incomes fall sharply on the back of the lower oil price (it was above $100/barrel only two years ago). Oil companies, like ExxonMobil and BP, are facing a squeeze as well. Many are paying out more cash to their investors each year (a.k.a. dividends) than they are making in profit (basically, to keep their existing investors happy). That�s clearly unsustainable over the long-term � and higher oil prices would alleviate that.