By Chrysostomos Tsoufis

The second production cut decision in just 6 months by OPEC+ leaves the market with a total of 3.66 million barrels less per day which translates to about 3.7% of global demand.

Last October the decision to cut production was 2 million barrels. In March Russia, also a member of OPEC, cut its own production by 500,000 barrels to … add insult to injury with Sunday’s announcement of an additional 1.16 million barrels of cuts.

For many, in essence, this decision it is an attempt by OPEC to become the CENTRAL BANKER of oil – and therefore in an equally important pole with the central banks – determining the decisions for the global economy. Oil producers have seen central bankers raise interest rates for so many months to tame inflation but push economies to the brink of recession which means less consumption and less money for S.Arabia, Kuwait, Russia, etc.

From close to $90/barrel, black gold traded below $70 in March. So they reacted to protect their gains and after all they had warned about it. One does not need to be a special expert to interpret the statements of the heads of OPEC in October who assured the camera that they will not let the market (prices) crash and run after the fact to fix things.

However, it is possible that they will shoot themselves in the foot. This move of theirs should re-inflame inflation which is on the decline, central banks should not back down and continue the hikes, the recession will come anyway and demand will fall flat. The question is who will back down first…

Since Sunday night, all the analysts are trying to guess what will happen from now on with the prices of oil. The main scenarios seem to be 2:

-In the first, demand in the second half of the year will recover and Russian production will be significantly affected by the sanctions that have been decided. The price will soar well above $100/barrel.

– In the second, demand declines even more in the second half of the year as large parts of the world will face recession and Russia will prove to be particularly resistant to sanctions. These cuts ensure that prices will not fall below $70.

His decision OPEC it also has geopolitical consequences. Some analysts were quick to talk about Riyadh-Moscow collusion. Riyadh categorically denies this even though in all OPEC decisions the 2 countries are always on the same side. Whatever the case, everyone agrees that this is yet another failure of American policy in the Middle East. A policy that is slowly but surely driving the key oil-producing countries of the region into the arms of China and Russia.

Somehow – and as long as the upward trend in prices continues – the gas station owners may be vindicated and finally Easter in the village will be with a price of €2/litre of petrol. Since March 10, although the international price of oil had dropped significantly, in Greece it is stuck at €1.9 on average. And maybe then the government will be pressured and announce another fuel pass since there is fiscal space.

From April Fools’ Day and until the end of the month when its sales period ends, heating oil will not have a government subsidy.