Crude production is now going to be cut because of the Organization of the Petroleum Exporting Countries new deal that was just made. Representatives for the oil cartel have agreed to reduce the number of barrels per day being produced by 1.2 million. Anytime there is a reduction in the output of oil barrels, it causes the existing oil prices to increase. This will be bad news for motorists but great news for banks.
In early 2016, bank stocks plummeted because of the falling prices of gas and oil. The price per barrel for oil was under $27. Motorists sure enjoyed paying under $2.00 per gallon for gas, though, because of this. As for the energy companies, they were struggling to payback their loans because they weren’t making as much money off the low fuel prices. Now this has all changed thanks to the OPEC agreement that was made on Wednesday. Not only will energy companies make more money so they can repay their loans, but banks will finally start to profit off the interest from those loans as the payments are made to them.
What is even better for the banks is that they already have high interest rates set from when things were going sour for them. So, with the bank stocks increasing, their economic growth is going to be in great shape. There are also hopes that it will continue to go this way after President-elect Donald Trump takes office because he is expected to loosen the regulations on many of these banks.
The price per barrel for oil jumped to $49.44, which is almost double what the price was at the beginning of the year. Although this may be good for the economy, it’s going to upset many motorists who now have to pay over $2 per gallon for gas again. The average price right now is $2.15 per gallon, but this is expected to go up even more in the coming weeks and months.