Abu Dhabi National Oil Co., the largest oil producer in the United Arab Emirates announced Friday a plan for reducing oil production to allow the UAE to meet OPEC’s reduction targets, causing oil prices to rise back over $37 a barrel.

Falling to a low of $33.87 last week, investors seemed clearly skeptical regarding the Organization’s ability to insist producers reduce their production to target levels. Economists and mathematicians in game theory discuss this as the “cheating problem” with artificially mandated limits; as production is reduced to monopoly-profit type limits, the incentive for any one individual to cheat and produce more increases exponentially.

OPEC’s target of a 1.5 million barrels a day reduction reached approximately 900,000 by end of November, and with the announcement of Abu Dhabi’s cuts, closing in on that goal this month seems likely.

Oil hit a record high in July at nearly $150 dollars a barrel, nearly five-fold what they are today; a combination of reduced consumption/demand, changing market conditions, an auto-manufacturer panic, environmental activism and perhaps even an artificial price bubble is to blame for the huge reduction in prices at this point.

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