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Market Update

What Does the OPEC Deal Mean for Energy Stocks?

The agreement to cut oil production in 2017 has led to a runup in oil-related stocks that's unsustainable.

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The agreement among members of OPEC to cut oil production has pushed oil prices higher and encouraged U.S. producers to ramp up output.

OPEC members are expected to reduce supply by 1.2 million barrels, or more than 1% of global production, next year. The production cuts will last six months starting in January, with a possible six-month extension to be considered at OPEC's May 31 meeting. But as oil prices rise during the first half of 2017, U.S. shale producers will ramp up activity, making OPEC's cuts for the rest of the year less likely.

Manuela Badawy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.