OPEC plan to raise oil price may not succeed

On Nov 30 when the Organization of Petroleum Exporting Countries agreed to reduce its output for the first time since 2008, international oil prices increased sharply. But will the OPEC's plan to raise oil price by cutting output succeed?

OPEC is the world's most influential oil cartel and influences oil prices by manipulating production targets. However, OPEC's capability to take concerted action has weakened because the number of oil producers in the world has increased in recent years. As such OPEC's measures may not dampen the new producers' enthusiasm to increase their production.

According to the Nov 30 agreement, OPEC members will start reducing their outputs by 1.2 million barrels a day from their current levels from January - equivalent to 1 percent of the total global output - and non-OPEC oil producers including Russia are expected to cut their output by about 0.6 million barrels a day. But will major oil producers, such as Iran that is desperate to expand its oil production and exports to increase its revenue to maintain its economic growth after the decades-long Western sanctions are lifted, benefit by reducing their outputs?