Opec today announced they are cutting oil production by 2 million barrels a day. They were joined by Azerbaijan who said they would cut an additional 600,000 barrels a day on top of OPEC's cuts. This is on top of the 1.5 million barrels of oil a day cut announced in October. This is the largest oil production cut in history.
To put this into perspective, world oil demand is about 86 million barrels a day. So just in the past 2 months, OPEC has cut world oil production by 5%.
And what happened to oil prices today, they are down about 5% to $41 per barrel.
The way I see it, OPEC just lost 4 million barrels a day x $40 a barrel, or about $160 MILLION dollars every day, or $58.4 BILLION dollars over the course of a year.
Oil prices are not controlled as much by the supply side as they are by the demand side. We could have even more influence on oil prices than OPEC does. If we keep our consumption low, who cares if they cut production. They are just taking money right out of their pockets! And we should all just stand by and let it happen.