The world's largest producers decided to keep production cuts last week, boosting oil prices for the second consecutive week. Citizens are in great fear, considering inflation and current oil prices. Oil prices rose 2.4 percent on the London market last week, to $90.65, their highest level since November 2018.
Analysts expect prices to rise further in the coming weeks as global demand continues to recover. The American market, however, saw the barrel rise by 2.9 percent, to 87.50 dollars, the highest since September 2018. Analysts believe that the price of oil will remain high in the short term, but will eventually drop.
Saudi Arabia and Russia
Several countries, including Saudi Arabia and Russia, have reduced production in recent weeks, contributing to the rise in prices. Trading analysts expected Saudi Arabia would extend its decision to cut supply until October, but Saudis announced last week that it will cut supply by 1 million barrels a day until the end of the year.
This move was seen as a surprise and caused a further increase in the global price of oil. It also raised expectations of further cuts in oil production. As a result, Russia has decided to cut its exports by 300,000 barrels per day until the end of the year.
Since the world's largest economies' growth is slowing, these countries are reducing production in an effort to maintain high oil prices. Following the lifting of restrictive Covid measures at the beginning of the year, traders were hoping for strong demand from China.
World's second largest economy, however, has been recovering much more slowly than expected from the Corona crisis. As a result of central banks' efforts to suppress inflation for more than a year and a half, western economies are also slowing down.
This is having a negative impact on international trade and is causing uncertainty in the markets. Many economists are now predicting a global recession. As the situation worsens, governments must take appropriate action to stimulate economic growth and create jobs.
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