KARACHI: Chairman of the National Business Group Pakistan and President of the Pakistan Businessmen and Intellectuals Forum (PBIF) Mian Zahid Hussain has said oil-producing countries have decided to reduce oil production to increase their profits, which will make oil more expensive, and inflation will increase globally.
Mian Zahid Hussain said that rich countries are plunging the world into a new crisis to acquire additional wealth.
He said that Russia has recently announced a reduction in oil production by 500,000 barrels with the aim of increasing its profits, providing resources for war, and punishing countries working against it.
Soon after Russia, OPEC Plus also announced a reduction in oil production of more than one million barrels per day, which will increase inflation and people's problems all over the world and further reduce global growth.
The move will also undermine global efforts to reduce inflation, he said, adding that according to an estimate, reducing production by oil-producing countries may increase the price of oil per barrel by up to ten dollars, which will increase the burden on oil-importing countries.
The business leader noted that by the end of this year, the price of oil will be US 95 dollars, while in 2024 it will increase to US 100 dollars.
Mian Zahid Hussain said that inflation had started to decrease in many countries and the people were breathing a sigh of relief but the oil-producing countries had taken a unilateral decision that surprised the world.
As oil becomes more expensive, inflation will increase, bond markets and currencies of many countries will be affected, and many countries, including the United States and Europe, will have to raise interest rates further.
He said that the recent one percent increase in the interest rate by the State Bank of Pakistan will increase the base interest rate to 21 percent and the bank spread to 25 percent, which will make it impossible to do business.
To get out of this difficult situation, Pakistan will have to develop its agriculture and make rapid progress on solar and wind power to reduce the oil import bill, he said.
Copyright Business Recorder, 2023
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