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Crude Oil: There is a huge jump in the price of crude oil today and West Texas Intermediate (WTI Crude) Crude is trading higher by more than 8 percent today. In fact, Saudi Arabia has said that it will cut oil production by five lakh barrels per day from the month of May till the end of 2023. At the same time, along with Saudi Arabia, some other oil producing countries like Iran have also announced a total cut of 1.15 million barrels in oil production. Due to this step, a strong increase in the prices of oil is being seen today. Today’s 8 percent jump in crude oil has been seen in a single day, after more than a year.
Crude oil became costlier today – what will happen next
Due to this sudden decision taken by Saudi Arabia and many countries, there is a lot of upheaval in the global oil market and today its effect is being seen in the form of rising oil prices. Many more negative effects of this step will also be seen in the near future. After the reduction in the production of crude oil, a strong increase in the price of crude oil can be seen. Although Saudi Arabia has described this step as a ‘precautionary step’ with the aim of stabilizing the oil market, but after this there may be more tension in the relationship between Riyadh and America. Already due to Ukraine-Russia war, the whole world is facing increased inflation rates and now due to decrease in oil production, the biggest danger is that the global inflation rates will rise further.
What effect will be seen on India / will the prices of petrol and diesel increase
Saudi Arabia and other oil producers have announced a total cut of 1.15 million barrels in oil production and this is definitely expected to increase the price of crude oil in the international market. Its negative effect can be seen on India as well and there can be an increase in the price of oil products like petrol and diesel. The availability of crude oil for petrol and diesel in India is mostly met by imports and due to costlier oil, the country’s import bill will increase, inflation rate will increase and the country’s trade deficit may also increase. Due to the exercise of reducing inflation, the country’s central bank Reserve Bank of India can also increase the interest rates.
What will be the effect on the global economy
The effect of high oil prices will be seen on the global economy as this decision of Saudi Arabia and other oil producers will support Russia which has been waging war with Ukraine for more than a year. America and other countries will have to spend more for crude oil and petrol-diesel due to the cut in this oil production. In the era of global economic recession and high inflation, this decision can be more heavy on these countries.
what saudi arabia said
Saudi Arabia’s energy minister said on Sunday that the cuts would be done in coordination with some OPEC and non-OPEC members. However, he did not name anyone. This reduction will be in addition to the reduction announced in October last year. Saudi Arabia and other OPEC members angered the US government last year by slashing oil production. At that time mid-term elections were about to be held in America and inflation was the main election issue.
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