OPEC+ cuts ahead of winter fan global inflation concerns

Concerns over tight oil supplies and soaring inflation have intensified after the OPEC+ group of nations announced its largest supply cut since 2020 ahead of European Union embargoes on Russian energy. The move has widened a diplomatic rift between the Saudi-backed bloc and Western nations, which worry higher energy prices will hurt the fragile global economy and hinder efforts to deprive Moscow of oil revenue following Russia’s invasion of Ukraine.

Global crude futures jumped this week, returning to three-week highs, after the Organization of the Petroleum Exporting Countries and their allies, including Russia, agreed to slash output by 2 million barrels per day just ahead of peak winter season. This is likely to drive spot prices higher, particularly for Middle East oil, which meets about two-third of Asia’s demand, industry participants said, adding to inflation concerns as governments from Japan to India fight rising cost of living while Europe is expected to burn more oil to replace Russian gas this winter.