OPEC agrees to cut output

Staff/wire report

VIENNA

Breaking with years of inaction, OPEC agreed Wednesday to cut its oil output for the first time since 2008. The move effectively scraps its strategy of squeezing U.S. competition through high supply that had backfired by lowering prices and draining the cartel’s own economies.

The reduction of 1.2 million barrels a day is significant, leaving OPEC’s daily output at 32.5 million barrels. And OPEC President Mohammed Bin Saleh Al-Sada said non-OPEC nations are expected to pare an additional 600,000 barrels a day off their production.

The combined cut will result, at least in the short term, in somewhat more pricey oil – and, by extension, car fuel, heating and electricity. The international benchmark for crude jumped 8.3 percent, or $3.86, to $50.24 Wednesday.

In June 2014, the price of oil started to drop from more than $100 a barrel. The drop in prices led to cutbacks by producers and that impacted suppliers such as Vallourec Star in Youngstown, which makes small-diameter pipe for the oil-and-gas industry. Vallourec Star made workforce cuts to deal with the loss of business. But there has recently been a change.

“We’ve seen signs of improvement in the U.S. oil and gas market where the rig count and OCTG [Oil country tubular goods] demand has increased for the first time since the end of 2014,” said Jean Gaetano, spokeswoman for Vallourec Star. “This progressive market recovery is anticipated for 2017. The increased demand has resulted in increased production volumes at all Vallourec Star locations. We are hiring skilled production, maintenance and electronic technicians for all shifts.”

Those interested can apply online at VallourecJobsOnline.com.

In the longer term, however, analysts say it’s unlikely that oil will return to the highs of around $100 a barrel last seen two years ago. That’s partly due to the fact that President-elect Donald Trump has promised to free up more oil drilling in the U.S., which would increase global supply.