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Brent Oil touched its peak since April on Wednesday as OPEC Giants Saudi Arabia and Russia cut the supply over China’s low demand. Although the Saudi government reaffirmed its support for the OPEC+. Brent peaked at $86.94 which was the highest mark since April 13.
Crude has touched its continuous sixth gain, On Tuesday China’s oil imports fell by 18.8% from the previous month.
Saudi Arabia already cut its voluntary production by 1 million barrels last week which follows the old path of Russian export by 300,000.
OPEC+ agreed on a deal to cut its supply by 2024, OPEC which can produce 40% of the world’s has been cutting its supply from late 2022. The Chinese economy suggests that the post-recovery isn’t that strong for China, rather the issue of higher interest rates with the US Banks and European countries is being seen.
High Inflation in general says that the high cost of manufacturing will be there and less hands for people to spend. All and all the economy does lie a lot on logistics and an increase in the price of oil will certainly hinder the pace of growth. Oil is the basic element for logistics and transport, if it rises it will affect every other commodity of society from even a needle to a humongous machine.
WHAT IS OPEC?
Oil is one of the most crucial elements we do have, it is used in gloves, cosmetics, medicines etc. OPEC stands for Organization of the Petroleum Exporting Countries. The group was founded in 1960. Being headquartered in Vienna, It does have more than 80 percent of proven reserves Venezuela is the giant in this.
Interestingly the United States of America produces the most amount of oil despite the fact that it is involved in almost all the conflicts on this planet. Crude oil that way is known as Black Gold.
Well according to the Saudi Arabia Ministry, the cut acts as a precautionary measure to support the stability and balance of the oil. For China, this is seen as another importer of energy. For the US and its allies, the increase in the price of oil and gas has caused a dramatic rise in inflation and interest rates.
This was provoked more when in early March 2022 Saudi Crown Prince Mohammad bin Salman and his counterpart Mohammad Bin Zayed of UAE, ignore the call of President Biden. This is one of the reasons why the USA has asked Iran to put a new Joint Comprehensive Plan of Action in place.
 FLUCTUATION AND THE OILÂ
The USA’s long-term foreign-currency Issuer Default Rating (IDR) was dropped from AA+ to AAA by Fitch and it looked more like a negative rate for them. The Fiscal decline is tremendous. The OPEC Nations has pumped around 27.34 million barrels per day this month which is low as compared to June of additional 840,000 barrels per day.
The dollar index rose against major currencies on Monday, recovering from Friday’s losses as a Federal Reserve official made comments supporting additional interest rate hikes. A stronger dollar makes crude more expensive for investors holding other currencies.
 European Union boycott of most Russian oil and a price cap of $60 billion on Russian import imposed by the EU and the Group of Seven democracies.
In the end OPEC+ is rather consider more as a cartel which would maximise its profit.
Oil Prices do have a strong impact on the Producer Price Index (PPI) than the Consumer Price Index (CPI) which measures the price which consumer will pay.
