CRUDE OIL PRICES RISE DESPITE INFLATION – IS CUTOFF THE REASON?
The global benchmark mark of the crudes all over, brent crude made a sharp rise in the crude oil price per barrel, following which West Texas Intermediate WTI also rose by some %. This sudden raise in the crude oil price is said to be a decision made after a lot of brainstorming, let us see what it is about.
Brent crude made a price hike of about 5.31% setting the per barrel price at $84.13 and the WTI US rose 5.48% reaching $79.83 per barrel.
This unexplained and no heads-up decision about the hike in crude oil prices came after the surprising decision of OPEC to cut off oil outputs.
All the OPEC members (nearly 23 oil-producing countries) have announced a cutoff in the output and will start to implement the decision in May of 2023.
Major oil-producing countries like Saudi Arabia, Iraq, and other Gulf countries have announced a slash in their per-day oil production, the slash will be one million barrels per day.
Saudi Arabia previously mentioned that their quotas would remain the same for the rest of the year, so this cutoff decision came out as a surprise.
A Saudi press official stated that this decision is a precautionary measure to maintain balance in the oil market keeping in mind the chaos in the economy right now.
The oil prices per barrel nearly touched the bottom line after the Silicon Valley Bank collapse in the US, this caused the fear of global recession to spark. The price of oil per barrel fell to as low as $73 and $67. Now this reduction in the output can cause a good raise in the price that is a 7% boost.
This price hike in crude oil does not affect the prices of petroleum yet or at least not until the Month of May.
But after that, it might cause a rise in the price of Petroleum all over the world, particularly in the UK. Now that the prices have increased, it is going to be a blow for inflation causing it to last longer and higher.
The decision is to maintain stability in the oil price but Biden and his administration called it an unwise move and also stated that “Saudi will face consequences”. Well as of now it looks like the administration had taken a step back about the statement.
Let us see what change this is going to bring in day to day lives of the common people.