Oil ministers from five of the world's largest producers have just decided you will soon be paying more for gas at your local station, reports CBS Senior European Correspondent Tom Fenton.
Within minutes, crude-oil prices shot up on exchanges around the world and then slipped back. But if the exporting countries stick to their decision to cut the flow of oil by more two million barrels a day - and it's a big if - experts say the price of crude oil could soar 50 percent to at least $18 a barrel.
Stephen MacSearraigh, editor of Energy Compass, says "I have to say that each will look to their own interest, and they will seek to maximize their revenues. And if that means cheating a bit, they'll do it."
They'll do it because they're desperate. The rulers of Saudi Arabia and Iran were personally involved in the decision, telephoning each other to agree on the size of the cuts. As their oil income dwindles, these countries face increasing unrest at home.
Saudi Arabia's Crown Prince Abdullah, the prime mover behind the cuts, has an urgent problem. The splendor of the Saudi royal regime can no longer hide the fact that the world's largest oil producer and exporter is going broke.
Saudi Arabia's debt is so huge that the country's domestic bonds have been downgraded to junk-bond status. And international hedge funds are now speculating on a devaluation of the Saudi currency.
All of the major oil exporting countries are in the same boat. Many of them, including Iran, are run by shaky governments flirting with financial collapse.
The question now is whether they are desperate enough to ratify the new production quotas when OPEC reconvenes in two weeks time, and then actually carry them out.
Saudi Oil Minister Ali Naimi said all OPEC members except Iraq have committed to the cutbacks, as did non-OPEC members Mexico and Oman. Discussions are under way with other non-OPEC countries, he said.
The pact was reached after two days of meetings among oil ministry representatives from Saudi Arabia, Iran, Venezuela and Mexico ahead of a March 23 meeting of OPEC oil ministers in Vienna, Austria.
The agreement is effective April 1, Naimi said. It must be formally approved at that meeting of the Organization of the Petroleum Exporting Countries.
Naimi said the cutbacks would be on top of existing OPEC and non-OPEC cuts of 3.1 million barrels a day agreed upon last June, exceeding five million barrels a day in total.
Algerian Oil Minister Youcef Yousfi, who is also OPEC's president, said a more precise figure and breakdown for the cutbacks would be given at the cartel's meeting.
After hovering near 12-year lows this winter, oil prices have rebounded in recent days as traders grew optimistic that some production cutbacks would be announced before the OPEC meeting.
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