OPEC Cuts Production Oil.
The United State versus Russia and its group of petroleum exporting countries,
the battle of who controls the global market, reaches a sensitive stage. Its consequences will destroy our financial system.
Last week, in a single day alone, oil soared by more than 6 per cent and continued to rise amid fears of falling inflation and tightening economic conditions.
Western countries, including the United States, tried to control the oil market by controlling oil prices and putting pressure on oil producers and OPEC members.
However, every action has a reaction that matches or exceeds it in power and effectiveness.
In this video we will reveal the reasons why OPEC Cuts Production Oil.
responded by cutting their daily oil production.
Up until now, there have been several oil output cuts totaling 3.66 million barrels.
And the recent one equals about a third of the total numbers, which, to be accurate, equals 1.16% million barrels a day.
With that huge number, we can only imagine how this could affect the global oil supply and demand as well.
But why did this group suddenly decide to do this massive cut?
But since the United State market and oil demand have weakened, this has provided a good opportunity for other players to control the market.
This is the main reason; the other reason is to bring oil prices back to their usual level of the past three months.
The banking crisis and its results were the main reason for the fast decline in crude oil prices to a level of $70 per barrel.
On the one hand, price ups and downs left investors uncertain about the market.
That forced them to ditch any risky assets, including commodities such as oil.
However, even though it’s a calculated move,
it’s a risky one as well.
By cutting oil, the global market will feel the heat, especially in terms of supply and demand.
Oil demand will rise in the next few days while its supply remains lower than the market needs.
This will cause an increase in oil prices.
Goldman Sachs says prices are expected to reach $95 per barrel by the end of December 2023.
Higher prices are not the only problem the global market might face; the sudden cut decision just complicated the Federal Reserve’s job.
There is a direct relationship between oil prices, mortgage rates, living costs, and manufacturing activities as well.
Higher oil prices could lead to a significant increase in mortgage rates, living costs, and declining manufacturing activities.
The Federal Reserve might be forced to raise its key interest rates to lower the rising tension caused by the increasing cost of living.
That could work in normal conditions, but with the banking crisis,
the central banks are being more cautious with their key interest rates.
That’s a great risk that these sudden cuts represent.
By lowering production, these countries are causing another problem that could lead to a large financial crisis.
A crisis that is larger than the one we had in 2008.
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