Production will be cut. Supplies to the rest of the world will be curbed. And inflation will rise just a little bit higher. No one ever expected the oil-cartel Opec(+), led by Saudi Arabia, to be friendly to the West, or to help out when it was needed. Even so, its decision this week to effectively side with Russia, and to make the energy crisis even worse, may quickly backfire. In reality, Opec was already in long-term decline. Picking a fight with the US will just make that worse.
It was certainly the kind of news the energy markets didn’t need. Just as it was getting over the loss of Russia’s crucial supplies, and as the price started to come back down again – from a peak of $130 a barrel soon after the invasion of Ukraine it was down below $80 again by the start of last week – Opec decided to cut back on its own production.
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