Daily Briefing: Next battle in the debt ceiling saga?
USA TodayAUG 2023
Saudi Arabia's decision to cut oil production is set to backfire on Riyadh and the Saudi OPEC cartel. First, it will pump extra money into the pockets of Western-sanctioned Moscow, which, in order to finance its invasion of Ukraine, is unlikely to keep its promise to extend production cuts. Further, it could also reignite inflation, which is likely to curb global consumption and prompt central banks to hike interest rates further. This would put additional pressure on the global economy and thus reduce oil demand.
Saudi Arabia's announcement to voluntarily curb its crude production in addition to OPEC+ output cuts is a prudent precautionary measure to improve market stability given the faltering global economy, the banking crisis, and the ill-considered price cap on Russian oil. Moreover, money printing by Western countries in recent years has fueled inflation and lowered the US dollar's value — forcing major oil-producing countries to take action to protect the US dollar-based value of their most important export.