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Crude Oil Spikes 4.8% on OPEC Agreement to Cut Oil Output

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On Wednesday, crude oil futures saw a nice boost, spiking 4.88% to $46.85 per barrel in late afternoon trading after it was announced that OPEC had reached an agreement to cut its oil output for the first time since 2008.

Today’s crude oil bump, however, is still well below the highs seen back in 2014, where oil was going for over $100 a barrel.

Sources told Reuters that “the group would reduce output to 32.5 million barrels per day [bpd] from current production of 33.24 million bpd.”

Leaders of OPEC, or the Organization of Petroleum Exporting Countries, have spent the last two days in Algiers discussing the potential for a cut in oil output. According to the Wall Street Journal, the meeting was a direct result of Iran saying it would be open to considering capping its total output at 4 million bpd, which is an increase from the current 3.6 million a day, said Iran’s oil minister Bijan Zanganeh.

However, Saudi Arabia, a leading member of OPEC, is in favor of a plan that would slash nearly 1 million bpd of oil from the overall market over the next year, as well as require Iran to hold its production at around 3.7 million bpd, a proposition Mr. Zanganeh has soundly rejected, the WSJ continues.

While this resolution of sorts means good things for the energy industry, boosting economies of oil-rich countries and brightening business prospects of oil giants, it only means higher prices at the pump for consumers.

Other companies in the industry seeing a boost today include Exxon Mobil Corp. (XOM - Free Report) , up around 4.3% in late afternoon trading, as well as Royal Dutch Shell ) and BP Plc. (BP - Free Report) up 3.08% and 3.45%, respectively. The VelocityShares 3x Long Crude Oil , an ETF that is composed entirely of WTI crude oil futures, was up big today too, gaining almost 15% at one point Wednesday.

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