On Wednesday, OPEC+ announced a dramatic reduction in production quotas, by 2 million barrels per day. According to oil ministers, the goal is to boost crude prices and “encourage investment” in the sector — making it sound like they are doing the world a favor. In fact, this is an extraordinarily harmful step that will push oil prices up — when the global economy is in a precarious state amid persistent inflation pressures.
Americans may first notice the effects at the gas pump, especially Californians already affected by some refinery shutdowns. Gasoline prices hit record highs in Los Angeles last week. A cut to global oil supply usually translates into even steeper increases in fuel prices and rising costs for goods.
The Organization of the Petroleum Exporting Countries has no incentive to drive the world into deep recession, so what are its members thinking?
