OPEC+ announced production cuts without warning, and international oil prices soared in response. The United States has desperately raised interest rates in the past few months to fight inflation, which may be in vain.

(Reuters)

Oil prices rebound as OPEC+ cuts output by 1 million barrels per day

[Reporter Li Qiwen/Comprehensive Report] Since the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to cut production by 2 million barrels per day in November 2022, there was no early warning announcement in early April. From May to the end of the year, production will be cut by more than 1.64 million barrels per day barrels of crude oil, including: Saudi Arabia and Russia cut production by 500,000 barrels each; Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, Oman, etc. cut production by 649,000 barrels in total. After two rounds of production cuts, it is estimated that global oil production will A reduction of about 3% in 2023.

Over the past month, global central banks have been busy coping with the financial market turmoil caused by the banking crisis. Now the rise in oil prices may once again fuel slightly slower inflation. Oil prices, which had fallen from their highs, climbed again. USD; WTI also jumped to $81.

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OPEC+'s decision to cut output highlights the low point in U.S.-Saudi relations.

(AFP)

Pro COSCO?

Saudi production cuts help Russia

After the Russia-Ukraine war broke out in February 2022, the price of oil once broke through $100. In order to prevent Russia from taking the opportunity to earn more war money, the United States has been calling on Saudi Arabia and other oil-producing allies to increase oil production and curb the rise in oil prices. This time, it is on the same front with Russia to jointly lead the production reduction plan, highlighting the fact that the conflict between the United States and Saudi Arabia seems to be gradually deepening.

Although Saudi Arabia and Russia claimed that the reduction in production was a decision made in advance to respond to the slowdown in global demand and prevent oil prices from continuing to fall, market participants analyzed that since Biden took office, the relationship between the United States and Saudi Arabia has fallen to the bottom, and Saudi Arabia is more actively seeking economically. Depeg from the dollar and even get closer to China.

China's intervention in the Middle East prompted Iran to resume diplomatic relations with Saudi Arabia.

(European News Agency)

911 mystery?

Sow the root of the conflict between the United States and Saudi Arabia

Saudi Arabia is one of the most important allies of the United States in the Middle East. In addition to targeting Saudi Arabia’s rich oil resources, the United States also needs to rely on Saudi Arabia to check and balance Iran’s power. However, Iran and Saudi Arabia, which broke off diplomatic relations in 2016 Arab countries have recently resumed the establishment of diplomatic relations under the mediation of China, which shows that while the competition between the United States and China is intensifying, and the United States is too busy dealing with the Russia-Ukraine war to be distracted, its influence in the Middle East seems to have quietly declined.

In addition, after the 9/11 incident in 2001, the American political circles had a certain degree of distrust towards Saudi Arabia. According to the previously released confidential documents of the U.S. government, the Saudi government was accused of being involved in the 9/11 terrorist attack. The relationship has not been made public, and the Saudi government has cleared itself, and even threatened that if the United States is held accountable or convicted, it will reduce its holdings of U.S. debt as a show of retaliation.

The United States suspected that the Saudi government was involved in planning the 9/11 terrorist attack, which was rejected by Saudi Arabia.

(AFP)

Journalist Murder, Yemen's Civil War, US-Saudi Far Away

In addition, the brutal killing of exiled Saudi journalist Jamal Khashoggi by Saudi agents in 2018 cast a shadow over the relationship between the United States and Saudi Arabia, and made the American political circle more convinced that Saudi Arabia's ultra-conservative The atmosphere and the oppression of human rights are far from American values, but then President Trump chose to ignore it and continued to support the Saudi government on the grounds of American economic interests.

After Biden took office, the two sides had different positions on the Yemeni civil war that has not ended in 2014, and the relationship deteriorated again. The United States stated that it would stop supporting and arms sales to Saudi Arabia, while Prince Mohammed bin Salman ) also decided to rebel and refuse to be at the mercy of the United States.

According to U.S. investigations, journalist Khashoggi may have died at the hands of the Saudi Crown Prince, but the U.S. did not impose relevant sanctions in order to maintain bilateral relations.

(AFP)

Rising oil prices push up inflation and raise interest rates

Russia’s invasion of Ukraine has indirectly boosted Saudi Arabia’s influence in the global oil market. As inflation is partly determined by energy prices, Saudi Arabia’s decision to cut production once again aggravates the pressure on global central banks to raise interest rates when oil prices have fallen slightly from their highs , It is also tantamount to rejecting the request of the United States to increase oil production.

Although the U.S. is dissatisfied with Saudi Arabia, Russia is the primary target of U.S. sanctions right now. At the same time, it has to prevent China and Russia from forming an alliance with Saudi Arabia. Therefore, in the current situation, it may be difficult for the U.S. to take any punitive measures against Saudi Arabia, let alone The bad thing is that the past efforts of various countries to suppress inflation may be in vain.

Rising oil prices will fuel inflation, especially in developing countries.

(AFP)

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