When OPEC made the unexpected decision earlier this month to cut production, the US President Joe Biden he responded with what politically would have meant a slight shrug. Ara was far from his earlier statement about the implications for Saudi Arabia when he cut production in October last year.

The country in question is also the de facto leading force of the cartel. oil. The lukewarm response partly reflects the Biden administration’s view that production cuts may not have the same severe impact on the US and global economy as the cuts in 2022, which occurred when oil supplies were still limited. US officials believe that the US economy and the global economy have now entered a more predictable and less volatile phase.

“]

Last year, the rapid surge of the coronavirus, which put severe pressure on the supply chain and, despite strong demand, sent inflation soaring to a 40-year high. Gasoline prices have stabilized at a lower level this year, US oil production is close to a record high, and the labor market, while still strong, is cooling with inflation, Washington officials say. The White House cut its 2023 GDP growth estimate to 0.4% in March from 1.8% in August 2022.

According to numerous interviews with US officials and analysts, the OPEC decision could complicate US President Joe Biden’s efforts to contain stubborn inflation and reduce domestic gasoline prices. The recent banking crisis in the US has added another factor of uncertainty to economic forecasts both at home and abroad. Commodity analysts at Goldman Sachs have revised down their end-2023 Brent oil price target, a global benchmark, by $5-$95 a barrel.

Analysts estimate that if it reaches $100, that would mean another 50 cents per gallon of gasoline, pushing gas station prices above the critical $4 level. High energy prices were the main pressure factor that forced the US Federal Reserve to raise interest rates and revived fears of a recession. “The expected increase in oil prices before the end of the year as a result of these voluntary cuts could spur global inflation, leading to more aggressive rate hikes,” Rystad Energy’s Victor Posnford concluded.