In a statement released on Monday, OPEC+ stated that the action taken on Sunday was a “precautionary measure designed to support the stability of the oil market.”
The Kremlin also justified the choice, saying that maintaining stable oil rates was “in the interests of the world’s energy markets.”
Dmitry Peskov, a spokesperson for the Kremlin, told reporters that “it was up to other nations to decide whether or not they approved of this.”
According to senior expert Ipek Ozkardeskaya at Swissquote Bank, Sunday’s decision is “in reality” intended to raise costs but may also have political ramifications.
According to her, the decrease in global oil inventories is “enough to revive geopolitical tensions with the United States, which had already criticized the decision as being poorly thought out, and more than enough to fuel inflation concerns throughout the world.”
The news drove significant gains for European energy firms and boosted the equity markets in London and Paris, though Frankfurt experienced a decline. Additionally, equities started higher on Wall Street.
ExxonMobil, Britain’s BP, and Shell all saw gains in their stock prices of more than 5%, while TotalEnergies of France saw gains of more than 6%.
As crude costs rose last year, oil giants saw unprecedented earnings.
The weekend development also stoked worries about a potential new consumer price increase that could force central banks to raise interest rates further and harm the world economy.
In an attempt to reduce excessive inflation, central banks have raised interest rates.
Nigel Green, CEO of financial consulting firm deVere Group, stated that there is “real concern that the unexpected decision will lead central banks to keep interest rates higher for longer due to the effect on inflation, which will impede economic development.”
Global stocks gained Friday after statistics showed that inflation was declining in the US and the eurozone.
The increase in energy prices, according to Green, “can be expected to raise inflation expectations, increase the cost of production and transportation, lower consumer purchasing power, and disrupt supply chains.”
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