The price of oil has been headline news for the past couple of years. For much of the previous decade, oil remained at around $100 a barrel, often even exceeding this symbolic price level. However, by 2014, prices started to fall drastically due to oversupply, particularly from Saudi Arabia and due to the US shale boom.

It reached a low of under $30 a barrel, and successive meetings of the Organisation of Petroleum Exporting Countries (OPEC) failed to agree to a cut in output. OPEC is a cartel of the main oil-producing nations that work together to stabilise the price of oil in their favour. Oil prices have since snaked upwards to around $50 a barrel.

In light of news last week that OPEC had finally agreed a modest collective cut in output, prices immediately shot up by over six per cent. This is likely to be a short-term shock reaction of the market, as a production cut wasn’t considered to be on the cards. Nonetheless, what medium- and long-term effects is this likely to have on the price of heating oil?

Some analysts have suggested that significant price increases are unlikely. OPEC has a reputation for discord due to the fact that each member-state could benefit individually by increasing its own production but will only benefit from a cut (and thus a rise in price) if all other member-states take part. This announcement is only a preliminary deal, as well – the issues of how much production will be cut and by whom won’t be settled until the end of November.

What’s more, the deal proposes a cut from 33.25 to 32.25 million barrels a day. This is considered by many industry insiders to be a negligible amount, as a similar quantity of oil was lost due to instability in the Niger Delta, which played a part in driving prices up to $50 a barrel. Even if OPEC can formally agree on a cut of this size, its impact on the market is likely to be small, with prices unlikely to exceed $60 a barrel.

Whatever the future brings, we’re committed to providing heating oil to our customers at the lowest price possible. Check out our prices by getting a quote through our site and see just how much you could save with us.