Oil Prices Surge After Saudi Arabia and Russia Announce Extended Oil Production Cuts Through End of 2023
Oil prices shot passed $90/bbl today after Saudi Arabia and then Russia announced a continuance of production cuts through the end of this year.
The BRICS alliance is going to deliver some pain to the Western alliance. Those people living in the living in the yellow zone, with leadership chasing climate change and Green New Deal policies, are going to see more durable inflation as the cost of oil is attached to just about every product and service.
Gasoline, energy products, petroleum products, home heating oil, groceries, everything will cost more as the geopolitical battle continues; but we are supposed to pretend we are unaware of the global political dynamic.
(Zero Hedge) – Just after 9am ET, Saudi Arabia said it would extend the voluntary cut of 1 million b/d of for another 3 months, from October until the end of December, well beyond the expectation of just 1 more month. Saudi press agency SPA notes that the voluntary cut decision will be reviewed monthly to consider deepening the cut or increasing production.
The extension of cuts is meant to reinforce the precautionary efforts made by OPEC countries with the aim of supporting the stability of the oil market. The Saudi announcement came a shock to market as 20 of 25 traders and analysts surveyed by Bloomberg last week had predicted the additional cutback would be continued for just one additional month.
And then, literally seconds after the Saudi decision, Russian deputy PM Novak said Russia would also extend its reduction of oil exports until the end of the year, reducing its oil output by 300kb/d in voluntary cuts until December 2023.
Similar to the Saudis, Russia said that the decision to reduce oil production to be reviewed monthly to consider possibility of deepening reduction or increasing production depending on situation on the world market.
“The U.S. Strategic Petroleum Reserve is empty, my friend”
(Yahoo) – Higher oil prices are bad news for the world’s central banks, which have been trying to tame high inflation since last year. Energy is a key input for economic activities, so higher oil prices generally lead to inflation.
But Saudi Arabia and Russia’s keeping their oil supply cuts for longer means “they have no interest in what central banks are worried about,” Naeem Aslam, the chief investment officer of Zaye Capital Markets, wrote in a Tuesday note seen by Insider.
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