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Three Member Countries Bail On OPEC’s Plan To Raise Oil Prices

Three OPEC member states won’t be complying with the group’s deal to reduce oil production, according to a new survey.

Angola will ignore OPEC’s plans to slash production, while Nigeria and Libya aren’t even bound by the cuts, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

Angola increased production by 200,000 barrels a day last month while Nigeria and Libya increased their combined production by 140,000 barrels a day.

OPEC recently announced production cuts, causing the price of oil to rise to around $52.04 per barrel. The move comes after OPEC refused to cut production in 2014 to depress prices and counter new competition, largely from U.S.-based hydraulic fracturing.

The cheap prices were intended to kill off the American fracking industry and other new producers, but they have not had their intended effect. OPEC members were hurt even more than U.S. companies.

Venezuela, for example, is facing economic collapse partially due to cheap oil. The country was even forced to import oil from America.

Saudi Arabia was far more capable of handling cheap oil, but even it had budget deficit of $140 billion in 2015— roughly 20 percent of the Saudi economy.

When compared to 2013’s surplus of $48 billion, the fiscal outlook looks so dire the International Monetary Fund warned the country it could go through its fiscal reserves within five years. Saudi oil export revenues dropped 46 percent in just last year and the country is selling bonds for the first time since 2007.

Saudi Arabia repeatedly blocked OPEC attempts to raise the price of oil to use low prices as a political weapon against Iran. Saudi Arabia and three other Sunni nations cut diplomatic ties with Iran in January and have been trying to prevent Iranian oil from reaching the global market.

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