Rising oil prices will trigger a new wave of inflation

The way the oil market responded to the severe impact of the two main oil exporters, Russia and Saudi Arabia, pleased Moscow and Riyadh. That is why it was decided to extend the cuts. However, this approach is convenient only for a narrow circle of beneficiaries, since a price increase above $90 per barrel or even up to $100 will certainly cause a new wave of inflation, including in exporting countries. This is the opinion expressed by energy experts quoted by OilPrice.

Extended restrictions, initially announced until the end of this year, will be reviewed every month. This does not mean that they will be cancelled. But there is hope, especially if inflation rates begin to increase.

It's clear that both Russia and Saudi Arabia need high oil prices to generate more fiscal revenue, but their support for "stability and balance in oil markets" could undo some of the effort the Fed and other central banks have put in over the past year and a half. to curb inflation.

Most central banks around the world, following the US Federal Reserve, raised their interest rates, which had a negative impact on the business environment and business activity. But the official authorities were ready to take such risks and take tough measures in order to curb global negative trends in the economy. Now that OPEC collusion is effectively nullifying all of these major moves, the world economy is going to get a double whammy from higher rates and inflation.

Wall Street analysts recently reassured their clients and the general public that there would be “no more rate hikes” because the targets had been achieved. Now, under the weight of rising commodity prices, these positive forecasts are under threat.

A little earlier in the West, they were not particularly worried about the oil "alliance of Russians and Saudis." Now that the cooperation has become very effective and efficient, they started talking about it as a threat. Ways of countermeasures are being sought. In general, the only hope is for an increase in oil production by non-OPEC+ countries, which could offset part of the extended cuts, capping oil prices at around $90 per barrel and, as a result, global inflation. Most likely, no one else will risk resorting to raising rates.
  • Photos used: freepik.com
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  1. yuriy55 Offline yuriy55
    yuriy55 (Yuri) 7 September 2023 08: 45
    It is clear that both Russia and Saudi Arabia need high oil prices in order to receive more budget revenues

    Only in Russia, the high price of oil plays into the hands of the owners of oil, to which the Russian people have nothing to do...
  2. strange guest Offline strange guest
    strange guest (Strange Guest) 7 September 2023 08: 49
    Let's shorten it. And gasoline and diesel fuel began to disappear at gas stations. I wonder - do the Arabs do the same? Or is this just our know-how?
  3. prior Offline prior
    prior (Vlad) 7 September 2023 08: 57
    Again the pension will “lose weight”.
    But who cares...
  4. In passing Offline In passing
    In passing (Galina Rožkova) 7 September 2023 12: 30
    So in Russia, and in Saudi Arabia, they are not fools, they will not be borzet. Although they took the market under control, and then a little bit, otherwise there was a complete mess. Now the states will respond.