It is a well-known fact that the prices of oil can fluctuate greatly based on various factors such as global supply and demand, political events, and natural disasters.
There have been instances in the past where oil prices have reached levels that were deemed unacceptable by some individuals or countries. For example, in the 1970s, there was an oil crisis that caused oil prices to skyrocket due to a supply shortage caused by the OPEC oil embargo. This led to widespread economic turmoil and fuel shortages in many countries.
Oil prices surge – will inflation become more obvious?
On Monday, crude oil prices went up unexpectedly following an announcement by major producers, including Saudi Arabia, of a cut in production, according to The New York Times. This move could pose a new threat to the global effort to control inflation, and it could challenge the Biden administration’s aim of reducing gasoline prices.
The international benchmark, Brent crude, increased by 6 percent to almost $85 per barrel during early trading, while the U.S. standard, West Texas Intermediate crude, also rose by a similar percentage, trading over $80 per barrel. The de facto leader of OPEC, Saudi Arabia, stated that it would decrease production by 500,000 barrels per day from next month.
When coupled with other cutbacks made by various OPEC producers, the overall production cut will amount to over one million barrels per day or approximately 1% of global oil supplies. Analysts have observed that this move indicates Saudi Arabia’s and its oil minister’s resolve to take proactive measures to maintain high prices, likely around $90 per barrel, thus boosting OPEC’s reputation as a preemptive force.
The overall prices of oil are determined by a complex web of factors and can fluctuate greatly over time. While there have been instances where prices have been deemed unacceptable by some, what is considered acceptable is subjective and can vary greatly depending on the context.