Oil prices have been rising for over three weeks with the recent surge coming in after the oil group – OPEC announced a surprise cut of another 1.16 million bpd in production. It follows a cut of two million barrels a day in October 2022 and led immediately to five percent rise in the oil price on international exchanges.

The step was unexpected as it was taken despite the slowdown in global economy but was emphasized to be a precautionary step to bring stability to the oil market by the Saudi energy ministry official. The axing of production by the OPEC came on top of a Russia’s decision to extend a cut of 500,000 bpd. Also, the surprise element was the fact that Saudi Arabia had announced lately that its production quotas would remain in place for the rest of the year. Though a pause was witnessed with weaker growth expectation as per the latest US and Chinese economic data. However the analysts and experts opine that the pause was only temporary against a bullish backdrop for oil prices.

Where on one hand, the OPEC cartel seems like boosting its revenues, the production cut and the resultant rise in prices is going to fuel inflation further- and certainly not a good sign for petroleum prices at home! Themove has been criticized by the White House especially after inflation had started to come down in the US and Europe due to fallingenergy prices following the price hike last year post Russia-Ukraine war.

Global analysts and economists have raised their forecast for oil price this year. There were already bullish sentiments over oil for the 2H of 2023 driven by recovery the in the global economy as well as the reopening of China fully post COVID-19 restrictions. Global banks have further raised their forecasts; Goldman Sachs raised oil price forecast from $90 to $95 a barrel for the end of 2023. It seems that inflation isn’t going anywhere in 2023.