What's going on?

OPEC+ � the group of major oil-producing countries and their allies � agreed late last week to add 500,000 barrels to their collective daily output, starting in January.

What does this mean?

First, some background: earlier this year � after a price war in which Saudi Arabia and Russia ramped up oil production and pushed down its price � OPEC+ agreed to lower its output for a while. There wasn�t much need for the slippery elixir at the height of the pandemic, after all � not with the global economy having all but ground to a halt.

As part of the agreement, OPEC+ said it�d start boosting oil production by 2 million barrels a day in stages � first in the summer, and next in January. But since the global economy still isn�t firing on all cylinders, OPEC�s settled on upping production by a quarter of that. Of course, no increase at all might�ve been even better�

Why should I care?

For markets: With friends like these��

The price of an oil future hit its highest level in nine months last week, partly because less fresh oil than expected should raise the value of what�s left. That�s especially true because demand for the black ambrosia is booming in Asia, given that growth is getting back to its winning ways � particularly in China. And since OPEC+ reached this compromise without too much fuss, analysts are more optimistic than normal that the countries who usually don�t stick to these kinds of agreements will do this time around.

The bigger picture: Betting on a brighter tomorrow.

By upping oil production, OPEC+ is essentially betting that the worst of the dip in global economic activity is in the rear-view mirror, and that growth � and with it demand for oil � will pick up next year. If it�s right, oil-dependent industries like construction and travel will start to recover � boosting oil�s price, balancing OPEC+ nations� budgets, and restoring oil companies� profits.