Opec’s gamble: Can the global economy cope with higher oil prices?

AS A historic price crash in crude brought turmoil to the global economy three years ago, Donald Trump led a broad effort by Western countries to cajole Saudi Arabia and Russia to slash output and prop up the oil market. The Opec+ (Organization of the Petroleum Exporting Countries plus 11 non-Opec members) cuts that emerged spared the US shale sector from collapse. Trump praised Riyadh and Moscow for their help.

Three years on, such cooperation has evaporated. The Kremlin’s war in Ukraine has led Europe to purge Russian energy from its economy, while the Group of Seven (G7) countries seek to dictate the price Moscow earns from its oil. Soaring crude prices last year deepened a rift between Riyadh and the US administration of Joe Biden, who entered office pledging to make Saudi Arabia a “pariah”. In October, the White House accused Opec+ of “aligning with Russia” after it moved to slash oil supplies.

The disintegration was visible again last week, when Riyadh and its Opec+ allies shocked the oil market by pledging to cut even more crude from supply – an effort to shore up oil prices despite swirling worries about the global economy’s health.