OPEC cuts oil production by 1.2 million barrels a day

The members of OPEC have agreed to cut oil production. This could soon result in an increase in gas prices in the United States.

Here's what we know

OPEC is an organization that controls the oil market in 15 different countries. Because these countries control such a large share of the total oil market, OPEC has an incredible amount of power when it comes to regulating prices. OPEC members include Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.

OPEC announced that Iran will be exempted from this cutback. The United States recently reimposed sanctions on Iran that had been lifted during the Obama administration.

U.S. Secretary of State Mike Pompeo said in November that these sanctions will result in Iran having “zero oil revenue."

"Let me say that again. Zero," he said. "One hundred percent of the revenue that Iran receives from the sale of crude oil will be held in foreign accounts and can be used by Iran only for humanitarian trade or bilateral trade in non-sanctioned goods and services."

Venezuela and Libya will also be granted exceptions. The remaining 12 countries will have to cut their production by 2.5 percent compared to October, or 800,000 barrels a day. OPEC partners will cut an additional 400,000 barrels a day.

In November, Saudi Arabia had its highest oil production of all time: 11.1 million barrels per day.

What else?

President Donald Trump has strongly opposed this move by OPEC. In November, shortly after he was criticized for not punishing Saudi Arabia for the murder of Washington Post columnist Jamal Khashoggi, Trump tweeted out his thanks to the Saudis for lower gas prices that were “[l]ike a big Tax Cut for America and the World."

Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let's go lower!
— Donald J. Trump (@realDonaldTrump) November 21, 2018

Trump has also criticized OPEC in the past for raising prices. On the Fourth of July, he slammed the monopoly in a tweet for “driving prices higher as the United States defends many of their members for very little."

OPEC blamed this particular tweet for a $10 percent spike in oil prices. OPEC Gov. Hossein Kazempour Ardebili warned. "Pls stop it, otherwise it will go even higher!"