Close this search box.

Oil Production Restrictions Could Keep Global Inflation High

Saudi Arabia, Russia and other OPEC countries’ decision to limit oil production to 9 million barrels a day until the year’s end has pushed oil prices to over $90 a barrel. The highest this year. This decision could cause global inflation to remain high longer. The markets do not like high oil prices, as this leads to high petrol prices and high transport and production costs. Is there any good news?

The International Energy Agency (IEA) has reported that shrinking supplies have increased oil prices by over 15% since July. OPEC+ is ramping up petrol price pain, triggering fresh and growing concerns about rising global inflation – which was beginning to ease – meaning central banks could possibly push higher-for-longer interest rates. Restricted oil supply leads to higher oil prices, which, in turn, can contribute to higher fuel prices for consumers and businesses, putting upward pressure on overall inflation. Higher energy costs also lead to increased production costs for companies, which are typically passed on to consumers in the form of higher prices for goods and services, again contributing to inflationary pressures.

Consumers might have to tighten their belts if inflation stays high over the next few months. Investors should not panic and remember that long-term investments are designed to ride the ups and downs in the markets.

More Articles

Contact Us